The end of the year is a good time for financial reflection and planning ahead for the upcoming year. By taking time now to make some adjustments to your finances, you can create a plan that minimizes debt, builds savings, and helps achieve the financial goals you desire.
Here are 9 things for you to review before the year wraps up, so you can financially thrive in the new year:
- Review Your Financial Goals
Reflect on any financial goals you had this year. Did you achieve them? If not, identify what got in the way. Unexpected difficulties and lack of savings discipline can easily derail financial goals, but it’s never too late to pinpoint what went wrong and chart a new course in the year ahead. Setting clear financial goals, and remaining committed to them, is critical to improving financial outcomes over time.
- Track Your Expenses
It’s important to understand exactly where your money goes throughout the year. If you don’t yet have a good system for tracking your expenses, there are many apps and tools that can make it easier. In the meantime, review this year’s bank statements and credit card bills to understand your spending patterns and identify areas you could cut back.
- Evaluate Your Savings Plan
The sooner you start to save on a regular basis, the easier it is to build your financial wealth. If you’re not currently saving consistently, determine what’s preventing you from doing so. By evaluating your spending and identifying areas of waste, you can achieve a meaningful savings plan in the new year. If you are saving regularly, consider what interest rate you’re currently getting. Moving your money into a high-interest savings account could help provide a bigger return on your investment. Depending on your level of risk tolerance, you might also consider an investment account to help you achieve your longer-term savings goals. Remember though that it’s always a good idea to consult with a qualified financial advisor before making any major financial decisions.
- Review Your Insurance Coverage
Insurance can be a critical tool for safeguarding your future, but it’s important to remember that purchasing it should not be a “set it and forget it” occurrence. As your life evolves, your insurance needs are likely to change. If you’ve made updates or improvements to your home, you may need to tweak your homeowners insurance policy to ensure you still have ample coverage. Likewise, if you’ve recently gotten married or had children, you may consider purchasing a life insurance policy. Or, you may consider altering an existing life insurance policy if your circumstances have changed.
- Check Your Credit Report
With so much identity theft these days, it’s critical that you keep a close eye on your credit report. Luckily, you can now obtain a free copy of your credit report weekly from each of the three major credit bureaus. Many banks and credit card companies also allow you to access your credit report right through their online banking platforms. At Bank5 Connect, our customers can review their TransUnion credit report and VantageScore credit score at any time through their online banking account. Reviewing your credit report on a regular basis not only allows you to identify and resolve any inaccuracies or fraud, but it also provides valuable insight that can help you improve and maintain your credit score over time.
- Establish a Debt Repayment Plan
If your credit score is suffering from accumulated debt, you should make a solid plan to tackle it in the new year. There are several different strategies that could help you pay off your debt so you can focus on building your wealth.
- Examine Your Retirement Contributions
If you have a 401(k), consider how much you are currently contributing to it. If possible, increase your contributions so you can maximize any kind of employer match that’s available to you. If you don’t have an employer-sponsored retirement plan, consider an Individual Retirement Account, or IRA. Remember that retirement contributions can help lower your taxable income now, so you can set yourself up for financial security later in life. You can even use a retirement calculator to help you estimate how much money you should aim to save. Just remember that it’s always a good idea to speak with a financial professional or tax advisor prior to making any major changes to your retirement plan.
- Consider Estate Planning
A common misconception is that only the wealthy need an estate plan. However, anyone with property such as a home, car, savings account, or retirement account should establish a plan for what should happen to those assets after they pass away. If you have already established an estate plan, you should review it at least once a year and make changes as necessary.
- Prepare for Tax Season
As the end of the year approaches, you should begin compiling all of the necessary documents you’ll need at tax time. Establish a folder or designated place where you can put all of your tax files as you receive them. You might also consider working with an accountant or financial advisor to find ways to minimize your tax obligations through tax deductions, credits, and adjustments.
By taking some time to review your year-end financial picture, you can head into the new year with a clear, actionable plan to help you achieve your financial goals. And don’t hesitate to reach out to us for more information about our high-interest savings accounts, credit cards for debt consolidation, and our free credit monitoring tool, SavvyMoney.