Year End Financial Checklist

stacking coins
How do your finances stack up this year?

As we head into the last quarter of the year, it’s time to start reviewing our finances to understand where we are, what we’ve accomplished the year, and what still needs to be done. I’m an organized person, and I love lists, so the best way to go through everything is to use a helpful year-end financial checklist. Here are some of the things you should review before the end of the year.

Know Your Income

Take a few minutes to understand where all your income is coming from. Create a list of all your sources of income – where they come from and how much you expect to receive this year. This includes any full or part-time work, side gigs, interest, dividends, and any other form of money you received. Is there any item that is more than dominates the list (>50%)? If so, start coming up with some ideas to reduce that percentage by growing your income in other areas. This will help diversify your income as no income source is 100% secure. Even if you’ve had a job for 20 years, the company could do layoffs at any time and you’ll find yourself with no job, and if that’s your only income source, no income. Scary!

After you’ve listed your current year’s income sources, do the same thing for last year and for next year. This will give you a good picture of where you’ve grown your income. You should always be looking for ways to build your income, as well as diversifying your income, year over year. If you want to find some ideas for a side gig that works for you, check out my post here.

Analyze Your Income

When you look at your income sources, what brings you the most happiness? Is there one particular source of income that provides you maximum happiness. Research has previously shown that $75,000 a year is the ideal income amount nationally to make most people happy. However, I think many factors roll into how happy you are, and the amount that works for you depends on the part of the country you live in and how you choose to live your life. Does working at your job day after day bring your happiness? The end of the year is a good time to take a step back and think about the things that bring you the most joy.

Review Your Investments

money growing on tree
Are your investments growing?

As you approach the end of the year, review your investment portfolio allocation. Your investments include your house, 401k, IRA, and other savings or investment accounts. If you don’t have a lot right now, this step will be pretty quick. Instead, you can jump to the next item and look at your expenses and savings.

There is a lot of advice out there about how to structure your portfolio between stocks, bonds, and cash. Much of the advice is age-based, since you can be riskier the younger you are and then as you age, you should be more conservative. Additionally, your personal risk tolerance also needs to be taken into account.

Personal Capital is a great free online tool that will not only track your net worth, income, and expenses, but it will also do an Investment Checkup to look at your current investment allocation, as well as analyze the fees you pay on investments you have. I also use Fidelity for my investments and the financial advisor I have there will also provide you with their thoughts on your current allocation. (With the new fiduciary rules, advisors are more cautious in the recommendations they give you, so they will often provide ‘generic’ advice.) In both cases, you will need to do some research yourself and adjust your allocation if you choose.

Where Did Your Money Go?

Tracking Spending Is Important
Tracking Spending Is Important

Include everything you spent money on this year. This should include everything from rent or mortgage, utilities, car payments, student loans, groceries, eating out, vacations, as well as all the other things like Uber, haircuts, clothes, shoes, toys, gifts, and so on. A lot of the time, you don’t realize how much you really have spent during the year without adding it all up and really reviewing it. You will notice all the things you bought that you didn’t need, or maybe didn’t even want. This gives you a good opportunity to adjust your spending, and start saving more.

If you need help getting started, see my post on How to Track Your Expenses which goes through steps to track your spending.

Debt, Loans and Payments

The end of the year is a great time to take an inventory of your outstanding debt and loans. When you take on too much debt, you can easily get in over your head and it can be very overwhelming. I recommend taking a step back and making a list of everything you have – how much is left to repay, what is the interest rate on each, how often do you need to make payments, how much is the payment.

Dave Ramsey’s “Debt Snowball” method is a great way to tackle outstanding debt. It starts out with paying off the smallest amount of debt first, then the next smallest, and so on, which can give you momentum to get the ‘ball rolling’. Another method is to start with the debt with the highest interest rate first. I would suggest doing what works best for you, as long as you can get some momentum, you will pay off your debt faster.

Increase Your Savings!

Save Aggressively, Save Early
Save Aggressively, Save Early

Once you’ve compiled all of your income streams and added up everything you spend money on this year, you can calculate how much you’ve saved. Make a goal for yourself to increase your savings rate by 10% next year. How can you increase your income? Where can you cut your spending? Similar to debt, you can start small and as you see your savings increase over time, the momentum will grow to save more and more every year. Start saving as early as you can to feel more confident in your finances, and reduce the stress that financial emergencies can have on you.

If you are making great progress on saving money, you will want to look at investing it more aggressively. Getting a measly 1% or less in a bank savings account will not keep pace with the cost of inflation. If you have $1000, there are a few ways to invest it. Similar to paying off your debt, you need to find the ones you are most comfortable with giving your circumstances and tolerance for risk.

Evaluate Your Insurance

It’s important to understand all of your insurance policies – health, home, auto, or life insurance. With all the natural disasters that occurred this year (hurricanes, floods, wildfires), knowing how you are covered when emergencies happen can help take some of the stress out. A lot of the policies are confusing, so it’s often helpful to give your insurance agent a call and have them walk through each one with you.

Also, make sure you are paying a good rate for what you need. The insurance business is very competitive, so switching providers can bring you some nice savings. However, keep in mind that sometimes you have to pay a cancellation fee with your current provider. Check out your insurance options, it may pay off for you!

credit report
Check your credit report and credit score!

Credit Reports and Credit Score

You should really review your credit report a few times a year. In the US, you can get a free credit report from each of the 3 credit bureaus once a year. It’s helpful to stagger them every 4 months, since they all tend to have the same information and it gives you the opportunity to check them more often for errors or fraud. The Federal Trade Commission estimates that 5% of credit reports have errors, so knowing that the information that is on your report and fixing any errors now can save you time, energy and stress in the future.

You can also get your credit score for free at Credit Karma, which is another great way to keep on top of your overall credit worthiness.

Life Balance

In addition to looking at your finances, you should also review your life balance. If you are working toward financial freedom or trying to secure a nice retirement, you still need to maintain a sense of your priorities in life. Take notice of what you’ve neglected in life – friends, family, your health, exercise, eating healthy. Make these things a priority in the new year.

Additionally, notice who you have surrounded yourself with in life. Are these people that are supporting your and making you a better person? Make sure everyone in your life has the right attitude, personality, work ethic, and positive spirit to help make you successful. Don’t let others drag you down! If there is someone that is putting a damper on your goals, talk to them, and if that doesn’t work, you may need to cut ties. Re-balance your life now before it’s too late and you are left with regrets. The end of the year is a perfect time to reflect on your values, priorities, and how you are living your life.

Over time, priorities can change, your work-life balance can shift, and that can have an impact not only on your happiness, but also on your finances. Go through this year-end financial checklist, evaluate your life and finances, and take an inventory of what you have versus what you need. Then start planning goals and an action plan for next year. Sometimes we all just need a little guidance (and a little help from our friends) to succeed.

Build yourself a game plan and blow away everyone’s expectations of you!

Reflect, Plan, Act!
Are there any ways you like to reflect on the past year? How do you evaluate your life and finances to set goals for the year to come?

5 thoughts on “Year End Financial Checklist

  1. The wise squirrel. I love your title.This is a great lesson that we all need to know and teach.That when it comes to saving money the right way, then you need to invest it right. Also great numbers when it come to average amount of yearly income. Debt loan and payment is also a great lesson. It is very easy to get into debt and hard to get out of it. Great job and keep up the good work.

    1. Hi Mark – Going through your finances on an annual basis is definitely something we need to learn to do. It helps keep us on track to save money, earn more, and pay off debt at a faster pace. Once you get in over your head in debt, it can be so difficult to get out of! Thanks for your comment! ~Jen

  2. I think these are good examples of how you can save more money in the long run!

    One of the things I still have yet to do is setting money aside each month to benefit my future, despite hearing so many others tell you how important that is but I will be sure to start as soon as possible!

    I will say that I definitely agree with surrounding yourself with the right people which will help you reach your goals. From what I have seen and heard, you become who you hangout with.

    There is one thing that I will be giving a try and that is avoiding the urge to buy or rent a car. I think in the long run, if I can live life without a vehicle bill, the amount I save will really add up and benefit my future.

    My question is, would you recommend others to try and live without something that most people have to benefit their future?

    1. I would definitely recommend going without certain “luxuries”
      so that you can benefit your future. If we try to live like everyone else and “keep
      up with the Joneses’” we will never be able to secure a comfortable future for
      ourselves. The norm is to spend money on big houses, fancy cars, eating out, clothes,
      toys, and exotic vacations without giving any regard to how spending versus
      saving will impact our financial future. I’m a huge proponent of living a more
      simple and frugal life, but also one that makes you happy.

      I think most people will find that as they start to cut
      small things out of their budget, they actually don’t miss those things.
      Surrounding yourself with people that have similar goals and values as you is a
      great way to enjoy living a life without luxuries you really don’t need.  Thanks for stopping by and your comment! ~Jen

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