The end of the year is fast approaching. So now is the time to sit down and look back at the year that was, and to get yourself organized for the coming new year. Spending just an hour or so on your finances now can end up saving you a lot of money over the course of the next year.
Here’s my year-end checklist to get your financial life set for the new year. I know this time of year is busy for everyone, but most of these items only take a few minutes and are well worth your time.
Check Your Credit
You don’t need to constantly monitor your credit as the commercials would have you believe. But it is good practice to check your credit once a year or so just to make sure there aren’t any mistakes on there that could cost you when you go to borrow money. You can get your free credit report from all three credit reporting companies at Annual Credit Report.com (This isn’t like those companies you see on tv. You don’t have to sign up for anything. You can get your credit report for free every 12 months no strings attached.) If you do want to keep an eye on your credit score more than once a year, I recommend using Equifax where you can get your credit score along with your credit report.
Contribute to Your Retirement Accounts
If you haven’t done so already, now is the perfect time to contribute to your retirement accounts. Max out your Roth IRA and consider it a gift to yourself this holiday season. Even better, contributing more to your Traditional IRA or your 401(k) plan at work will save you more money at tax time in April too! Check the contribution limits and see how much more you can stock away this year. Conversely if you turned 70 1/2 this past year you need take your required minimum distribution from your retirement accounts before the end of the year.
Re-balance Your Portfolio
Once or twice a year you should look to re-balance your investment portfolio to make sure you’re not becoming too weighted toward one asset class because it has outperformed everything else in your portfolio. Make the tweaks in your holdings necessary to stay on your plan and stick to the asset allocation you settled on.
Review Your Financial Picture & Set Up Next Year’s Budget
Hopefully you’re tracking your spending in some form (Quicken, Mint, an Excel Spreadsheet etc…). Look back at your spending over the past year, are you happy with how much you were spending on different items? If not, reflect the changes you’d like to see in your budget for the upcoming year and make it a point of emphasis to stick to it! If you don’t have a budget or don’t track your spending I recommend that you go to Mint.com ASAP and get started with it. If you need help setting up a budget, check out my 6 Steps to Creating a Killer Budget as your guide.
Review Monthly Subscriptions
Along the same lines of the last point, but many people will over look it because your subscriptions auto-renew. Paying for a gym membership you never use? Haven’t watched any movies on Netflix in a while? Are you paying for a cable package you don’t watch, or magazines you don’t read? Now is the perfect time to cancel subscriptions to things you don’t need or don’t use. You’ll be surprised at just how much you can save by trimming the fat in this area.
Give to Charity
Charities need your help year round, but at the end of the year and around the holidays is when most people think of giving. If you’re so inclined, make a donation to your favorite charity, and don’t forget that you may be able to write you donation off come tax time!
Use Vacation Time
At many companies the amount of vacation time you can roll over from one year to the next is limited. If you’re one of those people (like me) who save up all their vacation time until the end of the year make sure you use it! Losing any of the precious vacation time we’re allotted would be a crime. If you have big projects or circumstances that are going to prevent you from using your vacation time, you may be able to get paid for the unused time. Of course this all depends on your companies HR policies, but its something to look in to.
Update Your Resume
While we’re on the career front, the end of the year is a fantastic time to update your résumé. Especially if you’re currently employed. Many companies go on a hiring freeze during the 4th quarter of the fiscal year, so update your résumé now and you’ll be ready to jump on the next great opportunity to advance your career when hiring ramps up in the new year
Review Insurance Policies & Top off your Emergency Fund
Are you well protected if something happens to you in the coming year? If you don’t know, it might be a good idea to look over your insurance policies. Are your deductibles too high? Are you carrying too much/not enough coverage? Can you get a better rate with another company? Ask yourself these questions and shop around for better, more affordable coverage and you could save yourself hundreds in the coming year. Also look at your emergency fund, it’s recommended to keep six months worth of expenses stocked away for an emergency. If you’ve tapped your emergency fund for any reason this year, make it a point to top it off again. If you don’t have one, make it a point to start one and start saving some cash for any unplanned expenses that may arise.
Get (Stay) Healthy
Most (health, dental, eye…) insurance plans cover an annual wellness checkup. If you haven’t had one yet this year there’s still time to schedule one and take advantage of the benefit. You’re paying the premiums, you might as well use the coverage! If you have an insurance plan with a flexible spending account (FSA) and you haven’t used all the money in it you’ll need to before the end of the year because it doesn’t roll over and you’ll lose any money that’s left over! Personally, I prefer a Health Savings Account (HSA) which rolls the funds over from year to year. I find it makes things much easier to manage.
So, that’s my year-end checklist and a good place to start if you don’t have one of your own. If you do have your own checklist, let me know what’s on it!
If you’re looking for even more year-end money moves, check out the next post in this series.
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