Phoebe Venable: Assess finances before new year begins

It’s time to reflect on the closing of another year.

Each year brings with it a rebirth of potential, and there are always financial items on our lists of resolutions for the new year. Let’s take a moment to look back on your finances for 2013 and wrap up what we can before the year is through.

What do your retirement contributions look like? Contributions to your 401(k) plans and individual retirement accounts are tax-deferred, meaning you do not pay income tax on those contributed dollars until you withdraw the funds. Have you contributed as much as you can this year to your 401(k)? Do you need to increase your contributions next year?

It’s time to reflect on the closing of another year.

Each year brings with it a rebirth of potential, and there are always financial items on our lists of resolutions for the new year. Let’s take a moment to look back on your finances for 2013 and wrap up what we can before the year is through.

What do your retirement contributions look like? Contributions to your 401(k) plans and individual retirement accounts are tax-deferred, meaning you do not pay income tax on those contributed dollars until you withdraw the funds. Have you contributed as much as you can this year to your 401(k)? Do you need to increase your contributions next year?

What is the state of your emergency fund? Is your emergency fund in its own state of crisis at year-end? Did you dip into it this year to purchase car tires, a new A/C or heating unit, an extra-special vacation? You should have about six months of living expenses available at all times for those unexpected financial surprises. If some of those surprises happened this year and you’re not up to this amount, find ways to build it back up — perhaps through a revised budget.

Revisit the busted budget. So maybe 2013’s budget did not go according to plan. Look back and find where the budget fell short so you resolve those items in your 2014 budget. Don’t think of your budget as something that restricts you but rather view it as something that gives you control over how you will choose to spend your money.

There are three primary reasons that budgets fail: They are too strict (be sure to add a monthly cushion amount to your budget next year to account for the expenses that can’t be planned), they don’t allow for high spending months (while some expenses don’t change from month to month, some months, like December, will have extra expenses, so review every month of 2013 to find those months in your budget), and tracking spending is exhausting (find a method that works for you even if it is simply a quarterly recap). Resolve to keep your budget moving and learn from setbacks. Consider budgeting another exercise where practice makes perfect. A great budget resource can be found at www.mint.com.

Establish a new set of financial goals. Whatever your goals might be, you are more likely to achieve them if you write them down. Begin 2014 with written financial goals, both short term and long term. Consider writing a financial blueprint that outlines short-term (this year) and long-term goals (1+ years). Detail what you plan to accomplish during that time, what resources you will need to succeed, and how you can change aspects of your lifestyle to achieve these financial goals. Remember to be realistic with your goals and allow a little wiggle room from time to time. Check in on your list frequently to watch yourself progress.

Remember that if 2013 wasn’t the financial success you wanted, don’t dwell on that but resolve to move forward. Reflect on your accomplishments from 2013 and continue to search for financial and personal satisfaction in the year to come.

Phoebe Venable, chartered financial analyst, is president and chief operating officer of CapWealth Advisors LLC. Her column on women, families and building wealth runs each Saturday in The Tennessean.