Regardless of your personal finance performance in the current year, the end of the year is a time to create a plan for new beginnings. Here are some assessments you can consider including as you make your own end-of-the-year financial checklist. Ready?
The following post is by MPFJ staff writer, Laurie Blank. Laurie is a wife, mother to 4 and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom and to a simpler, more peaceful life.
One of the things I love about the end of the year is that it gives me a valid excuse to take an in-depth look at our financials and to modify anything that may need modification.
Call me weird, but as a total personal finance nerd, this end-of-the-year assessment is more fun to me than opening gifts and drinking eggnog.
The end of the year is a great time to take a serious look at how you did financially, and it’s a great time to make a new plan for how you’ll do things differently in the year to come.
Regardless of your personal finance performance in the current year, the end of the year is a time to create a plan for new beginnings.
It’s a time when you can make a plan to undo any personal finance blunders. If you spent too much this year, you can make a plan to pay off debt or to save more.
If you under-saved for retirement or your emergency fund, you can make up for it by going frugal and increasing your savings rate.
Here are some assessments you can consider including as you make your own end-of-the-year financial checklist. Ready?
Year End Financial Checklist Step 1: Assess Your Tax Withholding Rate
This is especially important if you or your spouse are self-employed. Unless you’ve been squirreling away a portion of income for taxes due, you may have a hefty tax bill come April.
Now is the time to compare your last year’s tax return with this year’s income and withholding, and work to determine if your income and deductions will leave you with a refund, or with a need to save more to pay in with.
If you find you need to pay more you can ramp up your savings and/or increase your current withholding amount through the end of the year to make up for some of the shortfalls.
Year End Financial Checklist Step 2: Assess Your Medical and Other Benefits
Benefits enrollment usually happens around this time of the year, so it’s a good time to assess your current options, see what worked and what didn’t, and make the appropriate changes.
Based on what’s expected for the New Year, you may be able to switch to a plan that’s not as expensive or comprehensive, or you may need to switch to a more comprehensive plan.
For instance, we knew that one of our kids would need braces this year, so we chose the dental plan that would pay the highest amount out.
In the coming year, there won’t be a need for braces, so we’re switching to a dental plan that will pay out less but also costs less.
Do a thorough estimate of your benefits needs for the coming year so you can decide which benefit options will best benefit you and/or your family.
Year End Financial Checklist Step 3: Think About Last Minute Tax Moves You May Need to Make
If you’re looking to reduce your tax burden, now is the time to look into making end-of-the-year contributions to your 401k, IRA, HSA, or other accounts that could allow you to qualify for deductions.
It’s also a great time to make last-minute charitable donations. The goal is to reduce your tax burden while doing good for yourself and others.
This may sound selfish, but think of it this way: the better situated you are financially in retirement, the less dependent you’ll be on already-strained government resources.
Year End Financial Checklist Step 4: Use Up Any FSA Monies
If you have an FSA or any other type of account where the remaining balance doesn’t rollover from year-to-year, now is the time to figure out a way to use it before you lose it.
Have you been putting off dental work or ordering new glasses or contacts? Use that money to get it done before the year ends.
Year End Financial Checklist Step 5: Create a Financial Plan for the Coming Year
Now is a great time to sit down, do a recap of your money management for the current year and make a money management plan for the New Year.
If you’re married, be sure to include your spouse or significant other. Talk about your financial and other goals for the New Year and make a monetary plan that helps you achieve those goals.
If you have a financial planner, schedule a meeting with him or her so that you can make your goals known to your planner and get assistance in carrying them out.
Commit to tracking your goals and to monthly meetings to make sure you are achieving all that you want to achieve in the year to come.
Conclusions
The New Year is a time for a fresh start. Find some time before this year winds down and complete your financial checklist so that next year’s plan will help you achieve all of your goals and dreams.
***Photo couresty of https://www.flickr.com/photos/otacke/12221292503/in/
