Your Year End Financial Checklist

As the leaves begin to turn and another year draws to a close, this fall might also be the perfect time to take a closer look at your financial health. For many people, a year-end financial review is a useful tool to identify things that are working well, where there might be room for improvement, and how to make the most of the year ahead. If you think you could benefit from a quick year-end financial review, we have included a brief checklist to help get you started:

Review Your Budget: The first step in any financial review is to analyze your budget. Compare your actual spending habits against your planned budget to identify any discrepancies. This evaluation will allow you to adjust your budget for the next year, taking into account changes in your income, expenses, or financial goals.

Assess Your Emergency Fund: An emergency fund is crucial to your financial health. It serves as a safety net in case of sudden job loss, medical emergencies, or any unexpected expenses. As a rule of thumb, your emergency fund should cover 3-6 months of living expenses. If you don’t have an emergency fund or it’s not sufficient, make it a priority to build or replenish it in the coming year.

Gift and Inheritance Strategies: The end of the year is a good time to utilize the annual gift tax exclusion, which allows you to gift a certain amount to as many individuals as you want without it counting against your lifetime exemption. This can be a strategic way to reduce a taxable estate.

Charitable Giving: Year-end is an excellent time to make charitable contributions, which can also provide tax benefits. Consider donating appreciated securities to avoid capital gains tax or giving directly out of your IRA to satisfy some (or all) of your required minimum distribution.

Review Your Investments: Review your investment portfolio to help ensure it aligns with your financial goals and risk tolerance. This is especially important if there have been any significant changes in your cash flow, net worth, or most important financial goals during the year.

Maximize Your Retirement Contributions: If you haven’t already maxed out your contributions to retirement accounts like 401(k) or IRAs, consider doing so before the year ends. These accounts often provide tax benefits, and contributing as much as you can helps ensure a more secure retirement.

Review Your Estate Plan: Lastly, don’t forget about your estate plan. Review your will, power of attorney, and beneficiaries on your financial accounts and insurance policies. Changes in your personal circumstances, such as marriage, divorce, or the birth of a child, may necessitate updates.

Lastly (and most importantly), if you have questions about anything on this list and how it might fit into your own unique financial plan, please just give us a call! This fall, next year and every day in between – we are always here to help.

Investing involves risk. No investment strategy can guarantee positive results. Loss, including loss of principal, may occur. Material discussed is meant to provide general information and it is not to be construed as specific investment, tax or legal advice. Keep in mind that current and historical facts may not be indicative of future results. Diversification is an investment strategy that can help manage risk within a portfolio, but it does not guarantee profits or protect against loss in declining markets.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. (C) Twenty Over Ten