End of Year Financial Planning Checklist

For most of us, the end of the year is a time of relaxation. As the holiday season dawns, it’s tempting to slow down with work, and to take some time off. And even if you want to keep up your momentum, it can be challenging to keep your work going when everyone else is on vacation.

It’s possible to use the end of year productively, though – by using the down-time to assess your finances, and to complete financial tasks you might have overlooked during the rest of year. And the best way to do that is to work through a year-end financial planning checklist. 

In this article, we’ll take you through the basic tasks that should appear on that checklist, and explain why they are important.

1. Your Family Financial Health Check

Before we get into some of the more technical aspects of year-end financial management, let’s take a moment to acknowledge that your financial health is intimately connected with that of your family. If you are going to spend some time assessing your financial health, and making sure your investments are in order, it makes sense to check in with your family as well.

This can even be a small part of your holiday celebrations. Though it might sound awkward to discuss finances over a family meal, encouraging your children (and even your parents) to be open about their investments, finances, and retirement plans can be a great chance for your family to share wisdom, ideas, and expertise. And by building an open dialogue with your children about money, you are setting them up for a successful financial future.

2. Check Everything

Now, let’s get into the more technical side of things. The first step in your year-end financial checklist should be to check in with every single financial product, investment, and account you own. And that means every single one – not just your bank accounts, but your Netflix account as well. Ideally, you should keep a list of every single financial commitment you have, and add new products or accounts to this “master list” as soon as you take them out. This should include:

• Bank accounts and credit cards
• Investments
• Subscriptions
• Bills
• Any other financial commitment

Having a master list of this type means you won’t forget you have certain accounts. This is easier to do than you might imagine, and it’s always a nasty surprise to check in with an account you haven’t used for a while to find you’ve been paying interest on an outstanding balance.

3. Adjust Your Tax Position

The end of the year is also a great time to assess your tax liabilities, and try to minimize them. As part of your yearly check-in, you should calculate how much tax you will owe at the end of the tax year, and make sure that you are not going to pay undue tax on your earnings for the year.

For most experienced investors, this will mean selling stock. And this is where having an adaptable, efficient platform like Wealthface is invaluable. With Wealthface, you can quickly assess how the value of your stocks compares to how it was a year ago. You can invest some of your income back into stocks, or sell stocks that are in a losing position, in order to limit your tax liability.

4. Invest in Your Retirement

The end of the year is also a great time to make sure that you are putting enough aside for your retirement. 

Investing the maximum possible is important, even if you are years away from retirement. Investing early will allow you to take full advantage of the magic of compound investment, giving your investments the maximum possible time to grow. 

And if you’ve put the maximum possible amount into your investment account and still have some money left to invest in retirement, you can use the end of year break to research the other options available to you. You can even use a platform like Wealthface to invest in dividend stocks that are highly likely to hold their value over the long-term, with the intention of using these as a source of retirement income.

5. Plan Your Retirement

Achieving a happy and fulfilling retirement is about a lot more than just investing in a pension, though. You should also have a good idea of how you’re going to spend that money when you retire. You don’t need to plan out your entire retirement as part of your end of year checklist, but it’s worth spending a few hours looking at your plans for the future, and updating them as necessary.

This can be a very enjoyable part of your end of year checklist, because you are essentially planning out the life you want in the future. And by looking at these plans regularly, you stand the highest possible chance of making them real.

6. Give to Charity

The holiday season is a great time to give to charity. There are many good reasons to do this, beyond the moral obligation to use your wealth to improve the lives of others. Giving to charity strengthens your community, and allows you to stimulate sectors of the economy which you care about.

And if you are in search of a more direct reason to give to charity, you should also remember that giving to charity can lower your tax liability for the year!

The Bottom Line

Building long-term financial health is about building habits. By checking in on your finances on a regular basis, you can ensure that you are in control of your investments, and that you understand how they are helping you build toward a successful future.

You can use the checklist throughout the year, of course, but the end of the year is a great time to work through this checklist, because most people have at least some time off – time that you can use efficiently by making sure you are in the best position possible for the coming year.