Financial housekeeping for the new year: Part III

In part one of our three-part series on financial housekeeping for 2014 we covered checking your credit status and updating your budget. Part two looked at updating your home inventory and reviewing your insurance. Now we'll discuss reassessing your investments and your financial "systems" such as record-keeping and automatic bill payments.

Re-evaluate your investments

A solid investment strategy shouldn’t require an overhaul, but it might need some tweaking. If you have a financial adviser, make an appointment. If you need one, get recommendations from friends and relatives, or go to the National Association of Personal Financial Advisors website. If you’re handling your own investments, examine the big picture, perhaps by listing all of your holdings and their value. Have there been changes in your life that affect how you should position your portfolio? For example, if you’re retired (or your spouse is) or one of you will be retiring soon, verify that you’re not overexposed to risk. Also look at changes in market conditions. With interest rates poised to head up, it might be time to take a new look at certificates of deposit and savings accounts. While you’re at it, compare your bank’s rates and fees with the competition (one good resource is Bankrate.com). Even if there’s no need to change your investment strategy, you might need to rebalance your portfolio to restore your planned mix of stocks, bonds, and other investments. For example, with stock values up 30 percent in the past year as bonds have fallen, the proportion of your stock holdings may now be higher than you planned, while your bond holdings may be lower.

Read "Money Mistakes To Avoid: 9 Lessons To Take Away From The Market's Ups And Downs" and "How To Tame Your Paper Piles" for more information.

Examine your financial systems

Have you inadvertently overdrawn your checking account during the past 12 months? Have you forgotten to pay a bill or two? Are you letting checks pile up on your desk until you get a chance to cash them? Now is the time to review your financial systems to figure out what works and what doesn’t. Direct deposit. If you’re eligible for direct deposit but aren’t taking advantage of it, now is a good time to sign up. With many financial accounts, regular direct deposits can help you reduce bank fees. Some employers let you split your direct deposit into more than one account, such as savings and checking, or into separate checking accounts.Automatic payments. You can avoid writing checks, paying late fees, and enduring dings to your credit score by having companies to which you routinely owe money withdraw the amount from your checking account or bill your credit card directly. If you’ve already done this successfully for some payments, find out whether you can do it for more. Conversely, if automatic bill payments have gotten you into trouble — perhaps by overdrawing your checking account — decide whether it’s a good option for you. One trick to avoid overdrafts is to enter the amount of the bill into your check register when you receive the billing statement, instead of when the amount is withdrawn. That way, you won’t mistakenly spend the amount needed for the payment. Remember, automatic bill payments don’t relieve you of your responsibility to check your billing statements and immediately report an error.Alerts. Another way to avoid overdrawing your accounts is to have your financial institution send e-mail alerts. You can set them up to be sent when your credit card or checking account balance reaches a certain level, for example, or when there’s a deposit or debit to your checking account. Adjust your existing alerts based on how useful they’ve been over the past year. Check whether your financial institution has added more alert options.Other reminders. Missed the deadline for those quarterly tax payments last year or for paying back that no-interest loan you got when you bought that new dining room set? How about the one for submitting those rebate forms? Set up or revise reminders in your own software, such as Microsoft Outlook, or in Web based apps such as Google calendar.Record keeping. When it comes to keeping receipts, warranties, bank statements, and other important paperwork, think back to what did and didn’t work in 2013. Maybe you need to replace your file cabinet with an electronic one. Or maybe you simply need to resolve to not let paperwork accumulate, and instead set aside a couple of hours or so every month to squirrel away things so that you can find them later on without causing an avalanche. You’ve probably adjusted your system for keeping tax records after filing your 2012 taxes back in April. If not, now is the time to buy a couple of accordion folders or a computer scanner. Also weed out documents that you no longer need. Have you been hoarding six previous versions of your will? Are you still keeping warranties for products like the television you discarded years ago? Review the contents of any safe-deposit boxes. Toss whatever you no longer need. Among documents that shouldn’t be in one are wills and other items that your loved ones will need if you’re in capacitated or die.Reduce paper. More companies are offering to send billing and account statements electronically or make them available online. That may be an option if you’re overwhelmed by clutter. On the other hand, if you have already signed up for electronic statements but find that you’re leaving them sitting in your inbox unread or you’re not logging into view them, consider going back to good old paper. But find out first whether you will have to pay a fee to get those paper statements.

—Anthony Giorgianni