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End of Year Finance Checklist

As each year ends, it’s smart to review your finances to see where you stand and identify opportunities. We provide a checklist to help you with this process.

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As the year comes to an end, it’s common to begin thinking about how we can improve our situation, whether it be related to money, health, or something similar. The final weeks of the year present a good opportunity to review your finances and ensure you’re moving in the right direction. This consists of tasks like revisiting your investments, planning your taxes, or establishing a budget.

No matter your current situation, reviewing and adjusting your finances going into the next year can alleviate stress and put you ahead of the curve. This article will provide you with a checklist of items you should take a look at as the year ends. We’ll also explain why working with a financial advisor is an invaluable resource now and in the future.

Person on computer going through checklist.

1. Taxes

Dealing with taxes can be stressful and quite daunting; however, if you plan for it, the process will be much easier on you. It’s crucial to know how much you’ll owe when tax season comes around, as well as what documents you’ll need to file. You’ll also need to keep track of deadlines, as they can change depending on the type of income you’ve received in the past year.

Seth Diener, a Private Wealth Manager at Diener Money Management LLC, explains that to prep for tax season, you’ll first want to “gather all tax documents like W2s, 1099s, and receipts for deductions.” Then, you’ll need to “calculate estimated taxes to see if adjustments are needed.” You may also want to think about “maxing out 401(k), HSA, or IRA contributions to lower taxable income.”

As mentioned, the type of document you’ll need to file and the deadline to do so may change depending on the type of income you’re reporting. If you’re an employee, you’ll receive a W-2 from your employer and will need to simply file a 1040 Individual Tax Return Form. However, if you own a small business or are a contractor, you’ll need to file forms that correspond with your business’s structure, as well as pay taxes accordingly.

2. Investments

Another crucial task is to measure your investment portfolio’s performance over the past year. This way, you’ll know if adjustments need to be made. This encompasses your brokerage account, retirement accounts (IRAs, 401(k), etc.), as well as alternative investments you’ve made, such as hedge funds or real estate.

Ideally, you’ll have been monitoring your portfolio month-to-month and week-to-week. But as the year ends, you’ll want to assess your current asset allocation and diversification to ensure you’re adhering to your overarching strategy. If you find any irregularities or negative performance, it may be time to rebalance your portfolio.

Some investors opt to work with discretionary advisors, either with a real person or a robo-advisor. If this is the case, your portfolio has likely been closely monitored year-round. Even still, you should take the opportunity to log in and see what’s been going on. Provided you have access to a human expert, be sure to ask plenty of questions if need be.

Besides what’s going on with your portfolio, it’s also important to stay informed about current events and market trends. Consider where possible risks may come from, as well as what you can expect as you transition into the next year. This is another situation where having an experienced financial advisor can come in handy.

Couple reviewing their finances on their computer.

3. General Finances

The end of the year is a good time to take stock of your general financial health. This broadly refers to any aspects of your finances we haven’t already touched on, such as your budget, credit score, insurance needs, and more. Below is a more detailed overview of each component you should ensure is sufficient or is on track toward your goals:

  • Budget. If you’ve been sticking to a budget, now’s a good time to see how well it has worked for you thus far. For those who would like to start one, the end of the year allows you to set one up for the future.
  • Calculating your net worth. Your net worth is a key indicator of your financial health and overall value. This can also be a good exercise to help you measure your progress toward goals, such as retirement. To do this, simply subtract your debts from your total assets.
  • Credit score. Like your net worth, a good credit score is a signal that your finances are on the right track. Services like Credit Karma, Experian, and Equifax allow you to check this figure for free.
  • Debt reduction. Reducing debt increases your net worth, reduces stress, and is key to positive financial health. Prioritize eliminating high-interest debt, such as those from car loans, credit cards, and student loans.
  • Emergency fund. Having an emergency fund in place is crucial. The general rule of thumb is to have at least three to six months of your monthly expenses saved up.
  • Estate planning. The end of the year is a good time to ensure your estate plan is up to date and satisfactory to you. This typically means updating beneficiaries as well as keeping track of your assets.
  • Insurance. Take this opportunity to assess your auto, home, and health coverage limits. Events in the past year may necessitate higher limits, such as buying a new, more expensive car or keeping up with inflation for home insurance.
  • Organizing important documents. This can feel like a chore, but not being able to find important documents when you need them can be problematic. Set aside a little time to tidy up your files and bring peace of mind.

4. Measuring Progress

It’s important to reflect upon your financial progress in the last year. This refers to anything from getting closer to retirement, breaking bad habits, or improving your emotional relationship with money. Of course, you’ll also want to benchmark your investment performance, as mentioned earlier.

Lindsay Bryan Podvin, a financial therapist at Mind Money Balance, explains that when you conduct an annual review of your finances, you should ask yourself questions like “What are financial tasks I’m proud of from the past year (aka what went well financially?)?” and “What purchases made me feel good?”. She also espouses that you think about when you’re being “compensated fairly at work” and whether you need “additional financial support” from an advisor.

Asking questions such as the above can help you arrive at an objective assessment of your past year as it pertains to finance. From there, you can make necessary adjustments so that you can continue improving in the next year.

5. Talk to a Financial Advisor

Last, but not least, you may want to speak with a financial advisor as you finish out the year. As you complete your annual review, they can help you identify new opportunities, adjust, and stay on track toward your goals. Whether it be taking a deep dive into your investment portfolio or tweaking your estate plan, they can provide immense value.

Before you meet with a financial advisor for your annual review, you’ll want to ensure you know what questions to ask. Diener says you should consider topics like “Are my current asset allocations still appropriate?” and “Should I explore tax savings strategies?”. Similarly, Podvin suggests you ask, “Here are the areas I’m proud of, and here are the areas that were a challenge. What ideas do you have that can help with those challenging areas?”.

Additionally, you’ll want to have important financial documents ready to present. This includes the following:

  • Bank statements
  • Pay stubs
  • Insurance policies
  • Tax returns

You’ll also want to be able to provide information about your current investments, if any. Traditional investments, such as stocks, bonds, and mutual funds are the norm here. However, alternative investments, such as real estate, collectibles, and hedge funds also apply.

If you don’t already have a financial advisor, be sure to look for a fiduciary with the expertise that fits your goals, such as a Certified Financial Planner (CFP) or Chartered Financial Consultant (ChFC). To find one in your area, consider using a free matching tool, which will pair you with a vetted professional that aligns with your interests.

Frequently Asked Questions

What are signs my finances are doing well?

According to Seth Diener, a Private Wealth Manager at Diener Money Management LLC, notable financial health signals include “having low debt relative to assets and income, having an emergency fund with 3-6 months of living expenses, contributing regularly to retirement accounts, not carrying credit card balances, and having appropriate insurance coverage.” In addition, simply being on track toward your goals, such as retirement or paying for education, are important indicators that you’re doing well.

What are often overlooked areas of people’s finances?

Per Diener, people may look past aspects like “account beneficiaries, large tax deductions that can change each year, reviewing fees for investments and accounts, changes needed to estate plans, assessing refinancing needs, and utilizing FSA funds before expiration.”

Should I work on my taxes early?

It’s never too early to plan for the next tax season. As the year closes, start thinking ahead to what you’ll need to get done or owe by the time April arrives. This includes knowing what documents you’ll need to file, deadline dates, and how to get help from a tax planner if you need it.