There is something about November and December that makes time move twice as fast.
One minute you’re buying Halloween candy, and the next you’re standing in Target three days before Christmas wondering how you’ve somehow spent $147 when you only came in for tape.
The end of the year has a way of sneaking up on us.
And financially, that’s not ideal.
There are several things worth reviewing before December 31—retirement accounts, taxes, savings, insurance, charitable giving, and your budget. But if we wait until we’re simultaneously buying Christmas presents, attending parties, traveling, baking cookies, and trying to remember whether we moved the elf last night, there’s a pretty good chance some of those things aren’t happening.
That’s why I like the idea of doing a year-end money checkup before the holiday chaos begins.
Not because you need another giant financial checklist.
Quite the opposite.
The goal is to spend an hour or two making sure your money is where you want it to be so you can head into the holidays—and eventually the new year—feeling a little more prepared.
Here are ten things I’d put on your year-end money to-do list.
1. Move Idle Savings Into a High-Yield Savings Account
Let’s start with an easy one.
If you have a significant amount of cash sitting in a traditional savings account earning next to nothing, this is a good time to ask:
Could this money be working harder for me?
Your emergency fund and short-term savings shouldn’t necessarily be invested in the stock market. You want that money accessible and protected from market swings.
But accessible doesn’t have to mean earning practically nothing.
A high-yield savings account (HYSA) can allow you to earn considerably more interest while still keeping your savings available when you need it.
Look at where you’re currently keeping your:
- Emergency fund
- Home repair savings
- Car replacement fund
- Vacation fund
- Tax savings
- Other large sinking funds
Then compare the interest rate you’re currently earning with reputable high-yield savings accounts.
It takes very little effort once the account is established, but it can mean earning additional interest on money you were going to keep in savings anyway.
Just make sure you understand any minimum balance requirements, withdrawal limitations, fees, and whether the bank is FDIC-insured before moving your money. This is the bank we use for ours.
2. Review Your Emergency Fund
While you’re looking at savings, check your emergency fund.
Not just whether you have one.
Ask whether the amount still makes sense.
Maybe your monthly expenses increased this year.
Maybe you bought a house.
Maybe your family grew.
Maybe your income changed.
Maybe you’ve had to use some of the money and haven’t replenished it yet.
Your emergency fund shouldn’t necessarily stay at the same dollar amount forever.
Calculate your current essential monthly expenses and compare them with what you actually have saved.
If there’s a gap, you don’t have to fix it by December 31.
Just identify it.
Then you can make rebuilding your emergency fund one of your financial goals for the new year.
3. Get Your Tax Documents Organized Before Tax Season
You don’t have to prepare your tax return right now.
But you can make future-you significantly less miserable.
Create a physical folder, digital folder, or both labeled with the current tax year. (Watch this video I did a few years ago that details how I keep everything organized.)
Then start gathering anything you already know you’ll need. (I keep everything organized in my tax spreadsheet to keep my sanity come tax time.)
That might include charitable donation receipts, business expenses, estimated tax payment records, property tax information, childcare expenses, investment records, medical expenses when applicable, and other tax-related documents.
As W-2s, 1099s, mortgage statements, and other tax forms begin arriving after the first of the year, you’ll already have somewhere to put them.
If you’re self-employed, this is also an excellent time to make sure your bookkeeping is caught up.
Please don’t wait until March to discover that you haven’t reconciled your business account since May.
Your accountant will thank you.
Probably enthusiastically.
4. Check Your Retirement Contributions
Pull up your retirement accounts and see what you’ve contributed so far this year.
If you have an employer-sponsored retirement plan, look at your contribution percentage and determine whether you’re taking full advantage of any employer match available to you.
If you have an IRA, check how much you’ve contributed and how that compares with the contribution limit that applies to you.
And don’t assume that because money is going into a retirement account, everything is taken care of.
Which brings me to the next item…
5. Review Your Asset Allocation
When was the last time you actually looked at what your retirement money is invested in?
Not just the account balance.
The investments.
Over time, market performance can cause your portfolio to drift away from the asset allocation you originally chose.
Maybe you intended to hold a particular mix of stocks and bonds, but after market movements, the percentages are now different.
Or maybe you selected investments ten years ago and haven’t thought about them since. Or maybe you’re like how I was when I first started investing and didn’t realize that it wasn’t enough to just sock money away in a retirement account – you actually have to buy something with that money in order for it to actually be invested.
Year-end is a natural time to review:
What do I own?
Does this still fit my timeline and risk tolerance?
Has my portfolio drifted significantly from my intended allocation?
Do I need to rebalance?
Rebalancing doesn’t mean trying to predict what the stock market will do next year.
It’s about bringing your investments back in line with the strategy you’ve already decided is appropriate for you.
And if you have no idea what you’re invested in?
Make figuring that out one of your year-end tasks.
If you need more help in this area, I highly recommend these two resources:
6. Use Your FSA Money
If you have a Flexible Spending Account through work, check your balance and your plan’s rules.
Some FSAs have a use-it-or-lose-it provision, although employers may offer certain carryover or grace-period options.
You don’t want to discover in January that you left money behind that could have been used for eligible healthcare expenses.
Check your plan now and determine:
- How much money remains
- Which expenses qualify
- Your deadline for spending it
- Your deadline for submitting claims
- Whether any amount can carry over
If you need glasses, contacts, dental work, or other eligible healthcare items or services anyway, now may be the time to take care of them.
7. Review Your Insurance and Beneficiaries
This isn’t particularly exciting.
It is important.
Pull up your life insurance policies, retirement accounts, and other financial accounts that allow you to designate beneficiaries.
Make sure the people listed are still the people you want receiving those assets.
This becomes especially important after major life changes like:
Marriage.
Divorce.
A new baby.
A death in the family.
Or simply realizing you haven’t updated something in 15 years.
While you’re at it, take a quick look at your insurance coverage.
Has your income increased?
Have your debts changed?
Did you buy a larger home?
Did you have another child?
Would your existing life insurance still provide enough support for your family if something happened to you? (Don’t have term life insurance? Now is the time to get it. We use Ladder, but we compare rates and get you and your family covered!)
Hopefully, you won’t need any of it.
But that’s exactly why it’s easy to forget about.
8. Decide on Charitable Giving Before December 31
If charitable giving is part of your family’s financial plan, look at what you’ve given so far this year.
Are there organizations, churches, ministries, or causes you intended to support but haven’t yet?
Now is the time to decide.
This is especially important if you’re making contributions you hope to include on this year’s tax return. Make sure you understand the applicable tax rules and deadlines, particularly for non-cash gifts or more complicated donations.
But even apart from taxes, I think year-end giving is a wonderful opportunity to ask:
Does the way we’re using our money reflect what we say matters to us?
Because that’s ultimately what stewardship is about. And I’m a huge fan of trying to intentionally increase our giving by 1% every year. Sounds small, but I promise you, most folks will say that they will give more but never actually put it into action. By strategically increasing our giving by 1% every year, we’re making sure our money is going where we actually want it to go.
9. Make Your Holiday Budget BEFORE You Start Shopping
Please do this one now.
Not after Black Friday.
Not after you’ve bought “just a few things.”
And definitely not after Christmas.
Decide what you can comfortably spend on the holidays before retailers start deciding for you. (You can also pull up your bank statements, or if you use an electronic budgeting software system, pull up the data from this time last year and look over how much you spent last year on holiday-related things to give you an idea of what to budget.)
And don’t just budget for presents.
Think about:
- Gifts
- Stocking stuffers
- Food
- Decorations
- Travel
- Christmas cards
- Shipping
- Teacher/co-worker gifts
- Charitable giving
- Holiday activities
- Clothing
- Hosting
- Family traditions
Christmas spending has a way of leaking into a dozen different budget categories, which is why people often spend much more than they realize.
Give yourself one total holiday number.
Then decide how you want to divide it.
If the numbers don’t work, adjust the plan—not your credit card balance.
10. Look Back Before You Start Setting New Goals
Before you rush into creating financial goals for next year, spend a little time looking backward.
Pull up your January budget or your financial goals from the beginning of this year.
What happened?
Maybe you paid off debt.
Maybe you finally built an emergency fund.
Maybe you started investing.
Maybe you increased your retirement contributions.
Maybe you bought a house.
Maybe you survived a financially difficult year and didn’t accomplish anything you originally planned.
That counts too.
Your financial life isn’t a series of perfectly executed spreadsheets.
Life happens.
Income changes.
Babies happen.
Cars break.
Medical bills show up.
Jobs change.
Opportunities come along that you never could have predicted in January.
So before immediately asking, “What do I need to fix next year?”
Ask:
“What did we do well this year?”
Then:
“What needs our attention next?”
Those two questions will give you a much better starting point for your next financial goals than simply copying someone else’s New Year’s money checklist.
You Don’t Have to Do All of This Today
If you read this list and immediately thought, Jessi, you just gave me ten more things to do, that’s not the point.
You don’t need an entire Saturday.
Pick two or three things and start there.
Move your savings.
Check your retirement account.
Create the tax folder.
Write down your Christmas budget.
Then come back and do a few more.
An hour spent getting organized now can save you from trying to make important financial decisions in the middle of December when your calendar is packed, and your brain is occupied with approximately 9,000 other things.
And perhaps more importantly, it gives you an opportunity to enter the holiday season knowing where your finances stand.
Not perfect.
Not completely optimized.
Just intentional.
Because before we start thinking about resolutions, fresh starts, and everything we want to accomplish next year, it’s worth taking a moment to make sure we’ve finished this year well.
