Personal Finance

A New Year Awaits: Your 2020 Financial Plan

January 3, 2020
What are you hoping to accomplish in the coming year?

Key Points

  • Setting clear goals and an overarching plan are important elements in making financial progress.
  • Breaking down large goals into manageable steps can help you succeed.
  • Our monthly financial planning guide will keep you on track throughout the year ahead. 

You have goals for the upcoming year—and one of the best ways to achieve them is to turn those aspirations into a concrete plan. “Start by prioritizing what you’d like to accomplish, breaking these things into smaller steps, and writing them down,” says Judith Ward, CFP®, a senior financial planner with T. Rowe Price. “Then take a holistic view of your income and expenses to help align your intentions with what’s realistic in your current situation.”

Planning is key to success

Our monthly planning guide gives you tips and ideas that can help as you’re putting together your plan—and monitoring it—throughout 2020. “Having a plan in place will make it easier for you to track your progress during the year,” says Roger Young, CFP®, a senior financial planner with T. Rowe Price. “The most successful plans aren’t one and done; they’re revisited and adjusted regularly. Things can change throughout the year, but a thoughtful plan will help you stay focused.”

January - Set your intentions  
  • Prioritize your goals. Start categorizing by what’s urgent, what’s important, and what can wait.
  • Draft a 2020 budget. Look at last year’s income and expenses and set your plan.
  • Make your 2020 IRA contribution. You have the potential to earn thousands more over the long term by making contributions earlier in the year.  
February - Prepare for tax time
  • Get organized. Gather last year’s forms and records. Make sure you have access to all documents needed.
  • File your taxes. Submit your return as soon as you’re ready but no later than April 15, 2020.
  • Invest your tax refund. You can choose to have your refund deposited directly into an investment account.  
March - Simplify your investments
  • Don’t forget your old 401(k). You have a few options.1 Consider factors like tax benefits, investment choices, and costs to determine what’s right for you.
  • Streamline holdings. Asset allocation funds provide a diversified portfolio in a single investment and are rebalanced regularly.
  • Automate investing. Contribute a set amount regularly to a tax-advantaged or taxable investment account.
April - Improve your financial standing
  • Check your credit report. You can access one free report from each major credit bureau per year. Request yours and resolve any issues.
  • Review your debt. Prioritize your debt repayments (credit card, mortgage, car loan). Target high-interest debt first.
  • Make your 2019 IRA contribution. You have until April 15, 2020, to make a 2019 IRA contribution (and to file your taxes if you haven’t done so already).
May - Invest in education
June - Do a midyear checkup
  • Check your budget. Are you sticking to your targets? If priorities have shifted, adjust accordingly.
  • Review your asset allocation. The appropriate mix of stocks and bonds in your portfolio depends on your risk tolerance and investment time horizon.
  • Fund your emergency account. Assess whether you are targeting an appropriate funding level (typically three to six months of expenses for most households).
July - Commit to your financial health
  • Be aware of lifestyle inflation. Also known as “lifestyle creep,” this is the tendency to spend more on discretionary purchases when your standard of living improves.
  • Practice mindful spending. Pause before you purchase anything deemed as a “want.” Waiting a self-assigned period, such as 30 days, before you buy will help make sure you really want a particular item.
August - Reassess your choices
  • Evaluate your insurance coverage. Review your coverage levels, including life, health, disability, liability, auto, and property. Research and pursue any discounts you might qualify for.
  • Review your memberships. Are you using the memberships you have to their full advantage (e.g., subscription and streaming services, gym membership)? If not, reevaluate if you really need them.
September - Organize and give back
  • Get yourself organized. Gather important documents—including tax returns, legal and estate planning documents, statements, and bills of sale—and store them as appropriate—electronically or as hard copies.
  • Make charitable contributions and donations. Consider different ways to make charitable contributions, such as through a donor-advised fund. Additionally, you can donate any items you no longer need.
October - Be vigilant with cybersecurity
  • Protect your passwords. The most effective passwords contain uppercase and lowercase letters, numbers, and symbols and do not contain words found in a dictionary.
  • Use multifactor authentication (MFA). MFAs provide an extra layer of security to prevent someone from logging in to your account. Once set up, in addition to your password, you will enter a one-time security code sent to your multifactor method.
November - Focus on family matters
  • Talk with adult children about money. As you prepare for the later years of your life, you may want to involve your grown children in the conversation. Your plans can impact their futures too.
  • Update your estate plan. Take into consideration the tax consequences on your estate and your heirs’ income needs. Review and update beneficiary designations on your various policies and accounts.
December - Prioritize your retirement
  • Prepare for your retirement. Aim to save at least 15% of your salary (including any employer plan contributions) across your retirement accounts.
  • Take required minimum distributions (RMDs). Whether you’re working or retired, if you haven’t reached 70½ on or before 12/31/19, at age 72 you must start taking withdrawals from your Traditional, Rollover, SEP, and SIMPLE IRAs. Pay special attention to the provisions of any Inherited IRAs. Note: If you turned 70½ on or before 12/31/19, you must take your RMD by December 31st each year.

A 529 college savings plan’s disclosure document includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. You should review the 529 plan offered by your home state or your beneficiary’s home state and consider, before investing, any state tax or other state benefits, such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s 529 plan.

1Consider all available options, which include remaining with your current retirement plan, moving your assets into your new employer's plan, rolling over your assets to an IRA, or cashing out the account value.

All investments are subject to market risk, including the possible loss of principal. Diversification cannot assure a profit or protect against loss in a declining market.

This material has been prepared by T. Rowe Price for general and educational purposes only. This material does not provide fiduciary recommendations concerning investments, nor is it intended to serve as the primary basis for investment decision-making. T. Rowe Price, its affiliates, and its associates do not provide legal or tax advice. Any tax-related discussion contained in this material, including any attachments/links, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or professional tax advisor regarding any legal or tax issues raised in this material.

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