Year-End Financial Planning Checklist

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It’s that time of year again.  While you’re spending money on gifts and holiday parties, it’s also important to consider some of the financial items on your year-end checklist.

  • Talk to a Financial Professional – Don’t procrastinate about creating or maintaining your personal financial plan.  Hire a professional to help you build a plan that make sense and keep you accountable.  You have enough to deal with on a daily basis, and your financial life is too important to keep on the back burner.
  • Tax-loss Harvesting – Review money-losing investments and consider offsetting some of your realized gains with some of the losses.  Most people wait until year-end to do this, but keep it in mind throughout the year when opportunities arise.
  • Review Open Enrollment Options – Your health insurance benefits may have changed, so you should pay close attention to the costs and benefits of the various options offered by your employer.
  • Flexible Spending Accounts – If you have an FSA, you’re probably rushing to schedule appointments with doctors and dentists before year-end so you don’t lose out on those funds.  There are FSAs that offer grace periods and money in accounts can carry over from year to year.  Know your options.
  • Maximize 401(k) Contributions – Make sure to take advantage of your employer’s matching contribution and the tax treatment of contributions to your 401(k).  If you’re not contributing up to your employer’s matching limit, then you’re leaving free money on the table.  If you are a business owner, know your options for retirement plans – the right plan is good for you and your employees, saves everyone taxes, and can also help attract talent to your firm.
  • Rebalance Your Portfolio – As your investments increase and decrease in value, your portfolio allocations shift away from your desired target.  It’s important to review and rebalance your portfolio to get it back to your desired allocation and level of risk.  By rebalancing, you’re selling investments that have performed well while purchasing investments that haven’t performed well.  Put another way, you’re selling high and buying low (my favorite motto).
  • Review Your Insurance Policies – It’s important to review your various insurance policies – health, life, home, auto – to ensure that your coverage is adequate.  If you’ve experienced a major event during the year, make sure to consider how it impacts your insurance plan.  And don’t forget to consider adding disability insurance to your portfolio if you haven’t already.
  • Update your Spending Plan – Nobody likes to build a budget, but now is the perfect time to create a plan to track your money inflows and outflows.  Work with a professional to create a plan that works for you and keeps you accountable throughout the year.  You’ll be surprised to see where your money goes, and how much of it is going.
  • Review Your Beneficiary Information – If you’ve experienced a major life event during the year – marriage, birth of a child, divorce – then it might be time to review your beneficiary information on your insurance policies, IRAs, and/or 401(k)s.  Failure to update a document after a divorce or forgetting to name a beneficiary may deny future generations to their rightful inheritance.
  • Establish or Replenish Your Emergency Fund – If you haven’t set aside 6-12 months of living expenses in a savings account, now is the time to start.  Or maybe you had to dip into your savings during the year and need to top it off again.  The holidays can get expensive, but having cash available on short notice to pay for unexpected costs like a new hot water heater or roof is something for which to be thankful.
Author: Charlie
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