September 29, 2023

Your Money: If the Taxes Are Done, You Might Consider a Financial Tuneup

That completed 1040 form and its various appendages, as well as the pile of paper that helped you fill them out, offer a window into your financial life. Aside from earnings, there’s often a fair bit about debt and savings and what you gave away.

So what better time than now to read it all over again to see what it adds up to?

In each of the last two years, I’ve been doing this financial tuneup myself.

Instead of taking a mental health day off from work to recuperate from doing my taxes, I take a fiscal health day to knock off as many things from my financial to-do list as I possibly can, from renegotiating cable or insurance deals to finding a better bank account.

Fiscal health day is not yet a national holiday, alas. So you may need to set work aside for a day (or over several lunch breaks) to do what needs to be done, since it’s often easier to reach customer service employees when the sun is up on weekdays.

But many people find that what they win back in savings or time from this investment in hours more than makes up for whatever income they may have earned during that period.

What might you do exactly? There are 31 ideas on the interactive checklist we built last year; it’s linked from the online version of this column.

And here’s what I tuned up this past week. Please share your own stories on the Bucks blog.

401(K) IMPROVEMENTS There are few more important tasks than tending to your retirement accounts, so this was my first stop.

First, I rebalanced. I keep my 401(k) in 80 percent stocks and 20 percent bonds, though you may be doing something entirely different for any number of reasons.

In the process I sold all of the company stock that had arrived as a portion of the employer match on my own contributions. If The New York Times Company stumbles (though, just to be clear, I have no idea whether it will), I don’t want my savings at risk at the same time my job is.

Finally, I crossed off an item that had been on my list for more than a year: I urged our head of compensation and benefits to add more index funds to the lineup of available investments in the 401(k) plan that I participate in. My plan currently does not have access to stand-alone, broad-based international or bond index funds; they’re available only through target-date mutual funds.

If your 401(k) plan isn’t perfect either, try to get a group of co-workers together to make some noise. To give my pleas more heft, I pulled in my fellow personal finance scribe Tara Siegel Bernard, who knows even more about this world than I do; she offered her own comments via e-mail.

A company called BrightScope grades many 401(k) and 403(b) retirement plans on its Web site, so that may help you get a sense of where your plan stands. (For the record, it rates my plan’s investment menu as merely average.) The site also names the plan administrator, so you know where to direct your inquiries.

SAVING FOR THE MEDIUM TERM There’s nothing duller than reading about somebody else’s budgeting struggles, so I’ll spare you mine.

The result, however, is that my household is finally on the ING Direct subaccounts plan. The anonymous author of the Five Cent Nickel blog helped popularize this idea in 2005, though many others have written about it since and we rounded up other companies that can help in a Bucks post last year.

The idea is to have separate, cordoned-off savings accounts for every goal that is important to you.

Each account can automatically pull money from your primary checking account every month, so you don’t even have to think about it. Or, if your income is irregular, you can push money to the accounts yourself via an online transfer.

My family is going to try this for expenses that come up at least once a year that can total four figures or more by the time they’re done. These include one-time charitable donations, clothing, vacations, camp for our daughter, synagogue dues and taxes on freelance income.

It took a couple of hours on fiscal health day to do the research, parse the family budget and open the accounts, but it was time well spent.

AUTOMATIC DONATIONS Rather than make a pile of donations all at once in December each year, we started making recurring monthly contributions to some of our favored institutions two years ago.

At the time, I mentioned that a site called Network for Good was our vehicle for doing so. Some of you pointed out that recipients lose a bit to fees in the transaction. On fiscal health day, however, it takes just a few minutes to set up recurring donations on one site. It can take an hour or more, however, to contact a bunch of institutions and print and fill out their forms (or discover that some of them can’t, in fact, ping your credit card each month after all).

This year, we added a few new recipients to our list. We also moved the operation over to American Express’s Members Give service, after Network for Good canceled our recurring donations several months back. We didn’t receive notice of the move and didn’t get any explanation (or apology) on the phone or via Twitter this week.

(Katya Andresen of Network for Good said that the cancellation affected only a small number of people and that she was “mortified” by the number of things that went awry in my experience with the site.)

So if your 1040 happens to show a refund this year and you don’t have debts to pay, this would be a good moment to open some subaccounts of your own.

Or if you’re feeling generous, the Members Give service makes it easy to take that lump sum and make some new tax deductions for yourself by making one-time contributions to a few worthy causes.

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