Year-End Financial Planning Checkup

At least once a year, if not more, you visit the dentist and doctor to make sure everything is 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 of the year without checking in on your finances, set aside a few minutes to complete this financial checkup.


Photo by CraftyGoat via Flickr

  1. 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, savings, or any year-end expenses you might have.
  2. Increase your savings: If you are a high earner, you may have already hit the maximum for Social Security withholding (for 2011, this is 4.45% of pay up to the first $106,800). That means you are seeing an increase in your last few paychecks. Use this money to grow your emergency fund or add to your retirement savings.
  3. Review your retirement plans and other investments: Now is the time to start thing about selling investments for tax-loss harvesting and making adjustments to your asset allocation. When you rebalance your investments, make sure you look at all of your assets and not just one portfolio at a time.
  4. 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!
  5. 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 31st. If you’ve met your deductible for the year, they’ll cost you less now than they will at the beginning of next year when your deductible resets.
  6. Review your insurance policies: Make sure you have the right amount of coverage, and are not paying for anything that you no longer need. If you have not shop around for a better insurance policy in a few years, make sure you do. I saved thousands the last time I did this!
  7. Review your tax situation: If you want to reduce your tax owed, you can:
    • If you own a home, you can make your January mortgage payment early to be able to deduct the interest paid on your mortgage.
    • 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 increasing your 401(k) or IRA contribution through the end of the year. Then think about how to plan to minimize taxes for next year.
  8. 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 next year.
  9. Check your credit reports: 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 and dispute any items that are not correct. You can also check your credit scores and see if there is anything that jump out at you.
  10. Calculate your net worth: Add up your assets, subtract your liabilities, and see where you stand financially. If you’re interested, 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.
  11. Review your will and living will: If you have these in place, great! — you are already ahead of the game. End of the year is a good time to review these documents and make updates.

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

About the Author

By , on Dec 7, 2011
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.

Leave Your Comment (3 Comments)

  1. D Finlay says:

    Thank you for the fantastic reminders. I never remember to check my credit report and I think that’s the most important one. I have found some errors in the past and had to request changes. It’s critical to know exactly what’s on your report. Thanks again.

  2. Jonathan says:

    I think you make an excellent point about reviewing insurance policies. These should be reviewed every year, after all what’s the point in paying out too much, which could be reinvested into savings. Equally if your net worth and earning capacity has increased, you may have to adjust your insurance to ensure that you are fully covered.

  3. Terry says:

    That’s a good list Jill.

    As a landord, I would add one more item to check off.

    Just so all the tenants know that I am thinking about them, in December I always send them a Christmas card with a gift card from Target.

    The holidays are a great time to enhance that good landlord-tenant relationship.

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