Personal Finance Checklist for End-of-Year Financial Planning

by Marilyn Lindblad, studioD

The end of the year is a time to contemplate the previous months and make plans for a new year. Because the calendar year and tax year end at the same time, year-end is ideal for reviewing your personal financial profile. Using a checklist for financial planning will help you manage any remaining matters for the current year so you're in a good position to greet the new year.

Tax Planning

The tax-planning items on your personal finance checklist are designed to maximize your tax savings. Estimating your tax bill for the year and comparing it to your withholding will help you avoid an unpleasant surprise next April 15. If you owe too much, there's still time to adjust your withholding to avoid a penalty, and if you're getting a hefty refund, you can withhold less next year and invest the difference. You may want to sell losing stocks at the end of the year to offset your taxable income. If you're self-employed, strategically buying equipment and supplies is another way to create deductions that may reduce your taxable income. If you're an employee, you can achieve a similar result by making tax-deductible charitable contributions.

Retirement Planning

As you approach the end of a calendar year, reviewing your retirement planning progress can help you reach your retirement goals. You'll want to contribute the maximum possible to your retirement accounts, including makeup contributions if you're over 50. If you've reached age 70 1/2, taking the required minimum distribution from tax-deferred accounts should be included on your list. Individual retirement accounts also belong on this checklist. If you have earned income and don't have an IRA yet, you can fund a traditional IRA until you reach age 70 1/2, and it's never too late for you to open a Roth IRA with after-tax dollars.

Estate Planning

Reviewing your estate plan once a year helps you keep up with life's changes. If you've had a major life event this year, such as a marriage or divorce or the birth of a child or grandchild, it may be time to revise your will or change the beneficiaries on your life insurance policies and retirement accounts. If others rely on your income for their survival, review your life insurance coverage to make sure they'll be taken care of when you're gone. Consider making gifts of cash or other assets to family members who will inherit them eventually. You won't get a tax deduction, but you'll cut the size of your estate, leaving less to pass through probate and reducing the tax your estate must pay.

Personal Financial Planning

The end of the year is a natural time to review your progress toward your personal financial goals and set new short-term goals for the coming year. It's a time to assess your earnings and investment results to stay diversified and to balance your portfolio to achieve your desired asset allocation -- the proportion of investments that you keep in stocks, bonds, real estate and precious metals, for example. Review goal-based savings accounts, such as funds designated to pay for your child's college, home maintenance or replacement vehicles, and make sure you will have the money you need when you need it.

Photo Credits

  • Comstock Images/Comstock/Getty Images

About the Author

Marilyn Lindblad practices law on the west coast of the United States. She has been a freelance writer since 2007. Her work has appeared on various websites. Lindblad received her Juris Doctor from Lewis and Clark Law School.

Zacks Investment Research

is an A+ Rated BBB

Accredited Business.