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What To Include in Your Year-End Financial Checklist

As tempting as it may be to take your foot off the pedal and just enjoy the holiday season, there are several financial issues that may need your attention as the year winds down. For instance, you don’t want to lose money, pay penalties, or incur any additional taxes unless you absolutely have to. This is why creating a financial checklist as the end of the year approaches can be crucial to getting the new year off to a great start. Here are seven tasks to add to your to-do list.

Sit Down for a ’30-Minute Family Report Card’

For starters, something that can be beneficial is to sit down and create a “30-minute family report card,” which is essentially a brief financial assessment period with your loved ones. During this time, you can analyze your current financial situation and review the past year.

Some questions to bring up in the discussion include:

  • Did you meet your financial goals?
  • Did you pay off the debts that you hoped to?
  • Did you keep within your budget?

Answer these questions thoroughly and honestly with your partner or family. If there are some areas that need improving, commit to making those changes now. There’s no time like the present to get a grip on your finances. 

PRO TIP: Consider scheduling monthly family check-ins regarding your finances. Go over your budget, spending, and goals to make sure you’re all on the same page.

Access Your Debts Going into the New Year

If your household has credit cards, a mortgage, student loans or any other loans/balances, it’s time to get serious about paying them off. Make a list of all your debts, how much their monthly payments are, and their full balances. Then review your budget to determine how much money you can apply to each above their minimum payments.

Review your budget to determine how much money you can apply to debt each month above the minimum payments. Then, set a deadline for paying off your debts one by one, from smallest to largest.

Contribute the Maximum Amount to Your 401(k)

Your company may offer a matching 401(k) contribution as part of your employee benefits package. This is free money to you, so if possible, it’s best to contribute the maximum amount to your 401(k) by December 31.

The threshold to qualify for your company’s matching contribution plan may differ from company to company, so it’s always best to check with your human resources department to see how much you need to contribute. Try to save at least the amount that your employer will match. Otherwise, you are leaving money on the table. 

PRO TIP: Consider increasing contributions incrementally each year. If you get a regular pay raise, you may not even miss the extra money from your paychecks.

Leverage Your FSA or HSA

A flexible spending account (FSA) is a special tax-free account in which you can contribute money that will pay for services that your health care coverage doesn’t cover. FSA’s usually have a deadline to use your funds or you lose them at the end of the year, so be sure to check with your benefits office so you use them in time. If you find yourself in the predicament of possibly losing a large sum of money, check the to stock up on medical supplies. Things like bandaids, ibuprofen, and feminine hygiene products may qualify!

You can also consider the benefits of saving money in a health savings account (HSA) instead if you have a high-deductible health insurance plan, which has lower monthly fees than other types of plans. An HSA offers triple tax benefits in the form of tax-deductible contributions, tax-deferred growth and tax-free withdrawals when you use the money to pay for qualified medical expenses. And compared to an FSA, you don’t have to spend the money in your HSA down each year, meaning you can allow it to grow over time until you need it.

Consider Any Life Changes that Occurred this Last Year

If you experienced a job change this year, whether from a job loss or new career move, here are some things to keep in mind. If you lost your job and received unemployment compensation at any time this year, you’ll likely need to report it on your 2021 tax return. It can also help to speak to a tax advisor regarding any tax implications for receiving unemployment benefits.

On the other hand, if you were promoted or changed jobs, it can be highly beneficial to review your life or other insurance policies to account for your new income expectations. In general, if you also experienced any life changes, like getting married or having a child, you may need to update your beneficiaries on existing policies.

Ultimately, the goal for evaluating your year is to see what this next year will have in store for you and what habits you need to instill to achieve your dreams. If at any time you’re unsure of your plans and need help with your financial strategy, enlist the help of Member Services.