End-of-Year Financial Checkup Checklist

By Jill (Staff Writer), on December 7, 2009

At least once  a year, if not more, you visit the dentist and doctor to make sure everything’s working properly – why not give your finances the same opportunity? As we approach the busy holiday season, it’s easy to let attention slip from personal finance. If you find yourself barreling toward the end of 2009 without checking in on your finances, set aside a few minutes to complete this financial checkup.

Photo by CraftyGoat via Flickr

• Adjust your withholding: Look at your tax return from last year. If you got a big refund last year, and have similar income and expenses this year, consider reducing your withholding for the rest of the year. This will put more money in your pocket for holiday spending, saving, or any year-end expenses you might have.
• Increase your savings: If you are a high earner, you may have already hit the maximum for Social Security withdrawals (6.45% of pay up to the first $106,800). That means you are seeing an increase in your last few paychecks. Use this money to increase emergency or retirement savings.
• Use up expiring funds: If you have a Flexible Spending Account (FSA) for dependent care, healthcare, or transportation expenses, the funds may be expiring at the end of the year. If they’re not expiring on December 31, they will almost certainly expire by March or April. Purchase additional over the counter medicines if necessary to use up funds in your healthcare FSA. If your dependent care or transportations FSAs have money left, there’s not a lot you can do to incur extra expenses – but use it as a lesson for next year, and estimate expenses accurately before locking your money away!
• Maximize insurance benefits: If you have to meet an annual insurance deductible and know you have medical (or dental or vision) expenses coming up, try to schedule the appointments before December 31. If you’ve met your deductible for 2009, they’ll cost you less now than they will at the beginning of 2010 when your deductible resets.
• Review your tax situation: If you fear owing the IRS, make your January mortgage payment early to be able to deduct the interest paid. If you freelance and want to defer income so as to not owe tax on it, delay your invoicing or extend your due date until January. If you are self-employed and have extra income, open a self-employed retirement plan so that you can defer taxes on that money until retirement. If you’re not self-employed and can afford it, consider upping your 401(k) or IRA contribution through the end of the year. Then think about how to plan to minimize taxes in 2010!
• Keep holiday spending in check: Even if some of the tips above put extra money in your pocket, do your best to control holiday spending. You don’t want to find yourself short on cash come 2010!
• Check your credit report: You are entitled to a free credit report from each of the three major bureaus every 12 months. If you haven’t checked one in the last year, pull a copy at annualcreditreport.com and dispute any items that are not correct.
• Calculate your net worth: Add up your assets, subtract your liabilities, and see where you stand financially. If you’re intested, CNN has some great tools to compare your net worth to others in the same income or age range. You can use your current numbers to help set goals for 2010.

These are a few ways I’m making sure my finances are on track as near the end of 2009. What did I miss? Tell us in the comments!

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Jill grew up in Texas, graduated from college in 2007 and is currently working in the DC metro area. Jill recently completed a 9-month certificate program in financial planning and will take the Certified Financial Planner (CFP) exam in November. After that she hopes to become a full-time financial planner. You can also find her as a staff writer at My Dollar Plan.

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