Your year-end financial checklist
It will begin soon enough – all those "beat the rush!" ads for holiday shopping, activities and events. Right now, you have a great opportunity to beat the rush to organize your year-end finances and make some smart moves for the New Year.
Consider the following tasks for your year-end financial to-do list.
Total up your year-to-date spending. Whether you organize by computer or on paper, make sure your tracking system for spending, saving and investment is up to date. This way, you can make sure you are on budget for the year and ready with data for tax time. Once you are finished, determine your net worth – what you own less what you owe – and get an early idea of what you need to change next year.
Check in with your planner or tax professional. Late December is a busy time for financial professionals. Take a minute to see if they can review your numbers and make suggestions on year-end financial activities and new moves you should make in 2016.
Make sure you’ve reviewed all your credit reports for the year. You are entitled to one free copy (https://www.annualcreditreport.com) of each of your three major credit reports from TransUnion, Equifax and Experian. It’s generally wise to schedule delivery of each at different points in the year to catch errors or irregularities.
Check and rebalance your portfolio. With the dramatic market swings this past year, be sure to check if your retirement and other investments are still on track with your investment goals. Get qualified help if necessary to see if the assets you own still fit your needs. And if you need to do any tax selling by the end of the year, now is the time to start thinking about it.
Check your insurance coverage. If you buy your own home, auto, life or other insurance policies, contact two or three agents representing highly rated (http://www.ambest.com) insurers to review the adequacy and pricing of your coverage. If you have made any structural changes or improvements to your home, make sure those actions are reflected in your homeowners insurance. Such work may boost your home’s replacement value. Also, if you’ve had a major life or financial event like a new baby or the purchase of a new home it’s time to make sure all your coverage is sufficient.
Update your W-2, benefits and estate plan if necessary. While you’re updating your insurance and investment needs for big life events related to family, property or marital status, see if your tax withholding and employee health coverage and investments need review. Get qualified help to make this assessment if you are not sure.
Empty out your flexible spending accounts. If you have a Flexible Spending Account for health care or other qualifying expenses, it’s time to submit outstanding claims from the doctor, dentist or optometrist. Remember you can only transfer $500 in your remaining balance over to the next year. Make any appointments or medical purchases you need to now and get the paperwork in fast.
Do a last-minute tax review. If you work alone or with a tax professional, review your annual income, investment and spending data to see if there’s anything you can do in the final weeks of the year to save on taxes. If tax-deductible donations to qualified charities and nonprofits are recommended, consult sites such as GuideStar (http://www.guidestar.org), CharityWatch (https://www.charitywatch.org/home) and Charity Navigator (http://www.charitynavigator.org) to evaluate your choices so you know your contribution is being well spent.
Save time and cut back on waste with online bill pay and deposits. Automatic online bill pay means you won’t have to waste time writing checks or risk late payment fees. Scheduling bill payment through your checking and savings accounts can save time and money, while setting up regular electronic deposits to savings and investment accounts can also help you save money before you are tempted to spend it.
Bottom line: Doing a last-minute review of your finances can potentially save money and help you save, spend and invest smarter in the coming year.
Nathaniel Sillin directs Visa’s financial education programs. To follow Practical Money Skills on Twitter: www.twitter.com/PracticalMoney.