August Is Time for a Financial Reboot / It's a Good Time for Year-End Financial Planning

• ANDREA COOMBES  for the Wall St. Journal writes: August. You could call it the nap-time of personal-finance planning. Many workers find this month is a quiet time at the office. For families, it's a time to amble back from vacation and start gearing up for the school year. But its very calm makes August a stellar time to work on your finances.

"August is a good time to start your year-end planning, and plan for next year, because once the holidays hit, you don't want to think about that," says Beth Lynch, a certified financial planner with Schneider Downs Wealth Management Advisors in Pittsburgh.
Ready for a personal-finance reboot? Here are six steps:

1 Get ready for upcoming college costs
Is your child in high school? Plan now for college scholarships.
Robert Weinerman, senior director, college finance, at consulting firm College Coach in Watertown, Mass., says the summer before 10th grade is the time to start.
"Look for five or six scholarships you'd like to win as a senior, and spend the next three years making yourself the perfect candidate," he says. (One search tool he likes is Scholarships.com.)

Another task for high-school parents: Use the College Board's calculator to get a sense of how much your expected family contribution will be for need-based financial aid.
"If they discover that the costs are higher than they thought, they need to be sure their kid applies to school where scholarships are more likely," Mr. Weinerman says. (Go to BigFuture.CollegeBoard.org. On the "pay for college" drop-down menu, click "tools and calculators" and go to "EFC calculator.")

Also, talk with your student. "The adults in the household should decide what they can and can't afford and then have a frank discussion with the future student so everybody is looking for a school that comes in at that level," Mr. Weinerman says.
And, if your college savings are invested in equities and that college bill comes due in the next year or two, start shifting to more conservative investments.

2 Prepare for workplace health-care and Medicare open enrollment
Come October, people who enjoy workplace benefits, and Medicare beneficiaries, too, generally can choose among the various plans available to them. Now's a good time to start recording all of the drug and other medical costs you incur so you can choose the best plan for you.
That homework can pay off. For example, Medicare Part D participants overpaid an average of $368 a year—and a fifth of them overpaid by $500 a year—because they failed to choose the drug plan most suitable for their situation, according to a 2012 report by University of Pittsburgh's Graduate School of Public Health.
"Start a list of those medications and which doctors you see. Is there an eye doctor, hearing doctor, any other specialist? That's a great list to have when you're trying to figure out which plan to go into," Ms. Lynch says.

3 Assess whether you need to rebalance investments
The Dow Jones Industrial Average (DJIA) is up about 19% year-to-date. That means the equity portion of your portfolio could be bigger than you realize, and that could hurt when the market reverses.
"If your risk tolerance is 60% equities, and we've had a nice run and you're up at 70%, you're not going to be happy if the market turns and you didn't take care of that," Ms. Lynch says.
Shift money from your top-performing assets into those that haven't done as well, but be wary of taxes. Tax-qualified accounts such as 401(k)s don't pose a problem, but in a taxable account, one tax-smart way to rebalance is to use new contributions to increase underweighted assets.

4 Revisit your budget
With seven months of spending behind you, "it's a good time to see how you're doing, especially if you're trying to be better about budgeting," says Lea Ann Knight, a certified financial planner with Garrison/Knight Financial Planning in Waltham, Mass.
Is it time to trim some costs, maybe eat out less? Are there forgotten charges you're neglecting? I'm currently paying about $16 a month for a Netflix account that allows for streaming videos online and receiving DVDs by mail. But I haven't requested a DVD in ages. By reducing the service to streaming only, I'll save $8 a month. Why waste $96 a year?
While you're budgeting, plan now for the rest of the year. Parents should account for back-to-school items, including clothes and books.
"That's not always budgeted for," Ms. Knight says. "It's not necessarily a big cost, but they do tend to be things that you only spend money on once a year. And then Thanksgiving, Christmas, Hanukkah—those can involve travel and gifts so you want to plan for that as well."

5 Set a course toward your goals
Do you have dreams of buying a house, getting going on college savings, or ramping up your retirement savings? Take the time this month to draw up a plan to meet those goals.
Your first step is to track where your money is going, and see whether you can trim any expenses to divert that money toward your stated goals.
Clients often say, "Oh, I can't save," Ms. Lynch says. "Well, let's take a look and see where we can cut. That's where they become amazed at how much it costs to go out to eat."
It's important to write down your goals, including a time frame for reaching them. "You're more likely to hold yourself accountable," she says. "Otherwise, it's out of sight, out of mind."

6 Plan for your next tax bill
August is usually a slow time for accountants and other tax experts—that makes it a good time for tax planning.
"People don't want to think about their taxes until they're getting ready to file, but it's often too late then," Ms. Knight says. Meet with your accountant to ask what steps you might take before year-end to reduce your 2013 tax bill.
"It may be as simple as making sure you've done everything you can to max out your 401(k)," she says.
If you use tax software, then visit that company's website—many offer planning tools. For example, TurboTax has its TaxCaster and H&R Block offers a Tax Estimator.
But be careful. These calculators are often set to the previous year's tax laws, which may change.

Adds Ms. Knight: "These types of sites don't really provide the tax-planning piece one could get from sitting down with a CPA."
Consider consulting with a certified financial planner who offers hourly planning—and limit the conversation to tax strategies, she says. "Many hourly CFPs offer real-time planning sessions for an hour or two on a specific topic."