I had an article pop up this week on year-end financial planning tasks. It caught my attention, so I clicked and started reading. I was aghast. The article started talking about analyzing your insurance and updating beneficiary information, checking your Social Security account and reviewing your credit reports. It talked about putting together a budget (if you’ve been here a while, you know I dislike that word with a passion), and contributing to all of the things (529 plans, retirement accounts, and more!).

It was overwhelming to me! No wonder people bury their heads in the sand when it comes to finances at the holidays! We are telling you that you need to do it all, right now! The message that you have to work a full time job, make the holidays perfect for your children and family, and also have your entire financial life in order now is unattainable. 

So, I’m writing this article to put into perspective what is really important to focus on during December regarding year-end financial planning. These are the 9 must-do year-end financial planning tasks for December. The rest of it will wait until January! 

9 Year-End Financial Planning Tasks 

1. Pay Your Bills on Time as part of your Year-End Financial Planning.

This may seem like a no-brainer. In fact, I hope it is! However, December goes by quickly. We lose track of time as we are focused on getting from one event to another. One of the most detrimental things we can do is not pay our bills on time. We can be charged fees and penalties, extra interest, and it can affect our credit score. 

So, while it’s easy to want to focus on all of the fun things going on, make sure you don’t miss paying your bills in December. 

2. Use Insurance Benefits.

This is most specifically related to health care benefits: health insurance, eye insurance, dental insurance. Take time and assess if you’ve used your benefits for the year. If you’ve not visited the dentist, do so. If you need to visit the eye doctor still this year, do it! You’ve paid for insurance, make it work for you! 

If you’re making appointments in December, take time and set up appointments for 2022. This will help insure you aren’t in a spot trying to fit things in at the last minute next year. Research says that your health and wealth go hand-in-hand, so prioritize routine medical appointments. 

3. Use FSA Funds.

Whether you have a flexible spending account for health or dependent care, take time to review your accounts. Depending on your employer’s rules, you may be able to roll up to $500 over to 2022, or you may not be able to. Anything you are not able to roll-over ensure you have a plan for using the money before the end of the year. Take time in December to submit receipts and get reimbursed. Money in your FSA belongs to you. Make sure you use it so that you don’t lose it! 

4. Review Your Brokerage Account Performance for the Year.

This is the most technical on this list. If you are unsure about this one, work with your investment professional and/or your tax professional. However, your analysis and any action needs to be made in the 2021 calendar year. 

In 2021 especially, investing for fun in brokerage accounts became a lot more mainstream. While it’s great to review all of your investment accounts, for the purposes of what is critical for year-end financial planning, I’m specifically referring to reviewing performance in your non-qualified accounts (accounts where gains are not tax-deferred). These are your standard brokerage accounts (not your retirement accounts – 401k, 403b, IRAs). 

Review your accounts for your overall taxable gain/loss for the year. This means you are looking in brokerage accounts for instances where you sold investments (i.e. mutual funds, stocks, bonds) in 2021. You are then adding up how much you made or lost as a whole from these instances. Overall gains are taxable, and it could be beneficial to sell positions that are currently at a loss to minimize tax liabilities. 

5. Make A Charitable Contribution.

If you are single you can deduct up to $300 if you make a cash contribution to a charity during 2021. That limit goes up to $600 for married couples filing jointly. While giving can make you feel good, it can also lower your taxes in the spring. 

You must donate cash (you can use a check or pay with a card, too) before year-end to take a charitable contribution deduction. Donating home furnishings and clothing does not count.

6.  Top off Your Retirement Savings.

I almost didn’t include this one in this list of year-end financial planning tasks. In reality you have until tax-day to make contributions for the 2021 calendar year; however, I include it because the sooner you put the money in, the better. 

First, it allows the money to be invested longer, working to compound for you. Second, putting money you earn in 2022 and using it for 2021, is kind of like being behind the 8-ball. That money you earned in 2022 should be filling up your goal contribution amount for 2022. You’re playing catch-up instead of working ahead. 

7. Take Your Required Minimum Distributions (RMDs).

If you turned 72 in 2021, you have until April to take RMDs from you retirement accounts (IRAs, 401ks, etc.); however, if you’re older than this, you must take your RMDs by December 31, 2021. Roth IRAs are not subject to RMD requirements.

So, as part of your year-end financial planning, work with your investment professional or the company where your retirement accounts are held to determine the amount of your RMD. If you fail to take your RMD before year-end, there are tax penalties. 

8. Start Thinking About What You Want Most in the New Year.

Be ready to hit the ground running in the new year. December is for soaking up family time and relaxing, January is for setting our year up for success. We can’t set ourselves up for success if we don’t define what success means. This is an individual thing. While one person may want to focus on maxing out their retirement, someone else may really want to focus on putting together a really strong spending plan that they can stick to throughout the year, and another person may be really engaged in funding an adequate emergency fund. 

While all of these are goals to strive for think about what you are most connected to. If you want real change to happen, being connected to your goals is critical. You need to mull them over in your mind, do an appropriate amount of research, weigh what it is you want most, etc., so that your goals are realistic and are your true goals. This is why I include this in my year-end financial planning tasks list, so that you have taken the time to mull over and are ready to act in January.

year-end financial planning

9. Make a Plan for January 1, 2022.

I love January 1. It’s one of my favorite days of the year and I spend a little time making sure I know what I want to accomplish ahead of time. This year it will be January 2nd (we’re doing something fun with friends for New Years weekend).  But, it’s a day where I focus on tasks that organize our life. It’s not a day where I overhaul my life (I’ve built something that I love), but instead focus on the things that would make life easier or lighter feeling. 

We always sit and talk about our goals for the year (some we’ve already begun talking about), but Jan. 1 is when we officially put them to paper. We include our oldest in this conversation, because if she has goals we need to consider how to support her. We then build a spending plan for the year around our goals and we update our net worth statement. I make a list of three things I really want to organize better (i.e. repurposing items to be more useful, shredding old papers – there is something about getting rid of unneeded papers that makes your house feel lighter, and organizing spaces that are completely disheveled). 

Take time in December as part of your year-end financial planning to think about how you want to start the new year off on the right foot. If you need anything to do this, acquire it so you aren’t waiting until mid-January or better yet ask for these items as a gift. Make a plan so that your start to the year is how you want it to be.

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