Get a Fresh Start on Your Finances

Get a Fresh Start on Your Finances

A new year always has us reviewing our life goals and making changes for the better. After the year we all shared, we couldn’t be more in need of a fresh start. While there’s so much we may not have individual control over (the coronavirus, the economy, politics), we do have great control over our own financial well-being. And these 12 simple tips from our team of financial experts will help you start the year off feeling confident and on track with your money.

1. Know your spending

Start your 2021 budgeting by reviewing where your money came from and what you spent it on last year. Make sure you’re intentionally spending in ways that support your values and your financial goals, rather than going through the motions. Decide what adjustments should be made, especially if your income has changed.

Lydia Walz, an associate in wealth management, suggests pulling reports from your bank and credit card accounts. “I like to do another export six months into the new year to see how I’m doing compared to last year,” Lydia says. “Just keep in mind that sometimes the last six months of the year can be more expensive than the first.”

2. Understand your employer’s equity

Be sure to review your equity compensation, including any stock options or restricted stock units that might vest in 2021. Vesting can impact cash flow and taxes throughout the year. Work with your advisor to diversify your portfolio in a tax-efficient manner to reduce the risk of concentrated wealth.

3. Register with the IRS, get your tax PIN

For the first time, the IRS is allowing individuals to voluntarily receive an Identity Protection Personal Identification Numbers (IP PIN) to file their 2020 individual income tax. The IP PIN is a six-digit number assigned to taxpayers with a Social Security number or Individual Tax Identification Number. It allows the IRS to verify your identity and accept electronic or paper tax returns in lieu of using your Social Security number. An IP PIN helps protect your identification and prevents others from fraudulently filing a tax return in your name.

Visit You’ll first need to create an online account with the IRS if you haven’t already done so. Alternatively, you can file Form 15227 (only for taxpayers with income of $72,000 or less) or visit your local tax office to get a PIN.

A couple more notes: Each spouse needs to get their own number, and an IP PIN is valid for only one year.

4. Contribute vigorously to your retirement plans

Check to see if you’re contributing the most you can afford to your retirement plans.

If you’re already maximizing contributions to your employer’s 401(k) plan ($19,500 or $26,000 for those age 50 and older), and you have more money available to contribute, consider a mega backdoor Roth conversion, if the plan allows it. This involves making additional after-tax contributions of up to $38,500 to the 401(k) plan, and then converting that amount to a Roth 401(k) at little to no tax cost, where the money will grow tax-free.

People who are self-employed may choose from a variety of self-employed retirement plans that allow them to contribute generously toward retirement, depending on their earnings.

If you’re employed and also earn income from serving on the board of directors of a company, serving in an advisory role to a company, or from other activities, you may also establish a self-employed retirement plan. Contributions to the self-employed retirement plan would be in addition to contributions you make to your work plan.

5. Consider refinancing

As we start 2021, rates have continued to remain remarkably low. A very general rule of thumb is if you can reduce your rate by at least half a percent, you should take a look. Your financial advisor can run the numbers, evaluate your breakeven and see if it makes sense for you.

6. Pare down credit cards

As you’re thinking about shedding unwanted items, consider your credit cards and bank accounts. It’s so easy to open new cards for a discount or bonus points that they can quickly pile up. Get out your wallet and spread out all your cards. Do you have any you don’t use? Forgot you had? Another reason to be in touch with all the credit you have is you’re more likely to notice and respond to any unusual or fraudulent activity.

“But don’t get out the scissors just yet … the next step is a little trickier,” says Linda Kitchens, Aspiriant partner and director in wealth management. “As you evaluate which cards you might shed, prioritize keeping cards with the longest history and that you’ve used and paid off balances on time. You also want the overall amount of credit extended to you to remain about the same as you’re shedding. While a bit of a project, it can help your credit score to know the rules and be strategic about your card use, as well as lighten the weight of your wallet.”

Also, take a look at all your bank accounts. Do you have duplicative or superfluous accounts? Perhaps you can earn more interest by combining accounts or save money on fees by closing some.

7. Pull your credit report

While you’re cleaning out the credit you hold in your wallet, get copies of your credit reports to make sure they also look clean. The three major credit bureaus are Experian, TransUnion and Equifax, and you can easily get reports from all three at You’re entitled to one free report from each agency for any reason every 12 months. So consider pulling a report from a different agency every four months to make sure no fraud or inaccuracies pop up throughout the year.

8. Review your property and casualty insurance policies

Asset values and your liability exposure can change dramatically from year to year. The new year is a good time to revisit your auto, property and umbrella liability insurance to make sure all your assets and risks are appropriately covered. Don’t forget to also revisit aircraft, boat and art collection coverage if you have them.

9. Get your estate planning documents in order

The deadly coronavirus has certainly called attention to the importance of having up-to-date estate planning documents and directives. Make sure you have healthcare and financial powers of attorney documents in place, and have named guardians for any young children. Check your life insurance coverage to confirm that it remains appropriate. If you have a revocable living trust, check that the assets are properly titled in the name of the trust to avoid probate. And, make sure your beneficiaries are current.

10. Save money on streaming and telecom services

“Are you paying too much for streaming services? Are you using them or just paying for them each month?” asks Talia Pierluissi, partner and director in wealth management.

For about a month, keep track of what you and your family actually watch, including on your phones and tablets. Then evaluate if you’re getting a good value and drop those services that aren’t so entertaining. Also review your cell phone, cable or satellite services, and internet plans to see if you can cut costs there. A friendly, patient phone call to your providers may unveil special offers you can take advantage of.

11. Maximize your health savings account

A health savings account (HSA) is a great option if you have a high-deductible health plan. Money can be contributed pre-tax, the account can be invested in mutual funds and grow tax-deferred, and withdrawals for eligible medical expenses are tax-free.

The maximum annual contribution to an HSA for 2021 has increased to $3,600 for singles and $7,200 for families, plus an extra $1,000 if you’re 55 or older. If you can afford it, we suggest paying current medical bills out of pocket while you continue to invest in the HSA and benefit from tax-deferred growth. After you retire, you can still use your accumulated savings toward expenses, even on Medicare.

12. Talk to your wealth advisor

Have you been waiting for COVID-19 to calm down so you can visit your advisors and update your financial plan in person? Depending on where you live, that may not be safe to do for some time. So don’t wait any longer. Schedule a video conference or phone call as soon as possible to discuss any major changes in your financial life and be sure your goals remain within reach.

(In addition to the wealth managers mentioned above, the following Aspiriant experts contributed to this post: Sandi Bragar, managing director in Planning Strategy & Research; Raymond Edwards, national technical tax director; Peter Schwartz, director in wealth management; Gina Wohl, manager in investment advisory; Randy Rae, manager in investment advisory; Nick Ruzette, senior associate in wealth management; April Antonio, associate in wealth management.)