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Year End Financial Checklist

Year End Financial Checklist

November 16, 2022

As we near the year-end and our focus shifts to the holidays, there are a few areas related to your finances you should review.  Here are four that shouldn’t take too much time but could have a big impact.

1.     Review and update your beneficiaries on your retirement accounts, life insurance policies and in your Trust(s).  Changes in family dynamics such marriage, divorce, birth of a child or losing a family member are events when you should check to make sure your beneficiaries are updated and current.  If they are not correct, then you run the risk of an unintended person receiving your assets.

2.     Review your tax withholdings from your paychecks for the year.  Changes in marital status or the number of dependents may impact the amount of tax you pay in April.  Tax withholdings from your paycheck is what is “prepaid” toward your tax liability that is calculated when you file in April.  If you withhold too much you get a refund; too little then you owe.  Both have pros and cons depending on a person’s goals and perspective.  This is a good time to meet with your accountant to do a year-end estimate of your taxes to see where you might end up when filing taxes.  To change the amount being withheld, simply provide your employer a new Form W-4.

3.     Contribute to your retirement accounts and health-savings account (HSA) to reduce your tax liability.  Most people are aware of contributing to their retirement accounts but aren’t familiar with the benefits of contributing to an HSA which allows for pre-tax contributions to cover medical related expenses.  While HSA contributions are deductible on federal tax returns, some states (e.g. California) do not allow the deduction for the state return.  You can make contributions for 2022 to an HSA or IRA up until the federal tax deadline, April 18, 2023.

4.     Adjust your budget for inflation.  This is a great time to review your budget to make sure some line items such as groceries and gas are still accurate.  Most likely you’re spending more and will need to increase them in your budget which may cause you to adjust other areas in expenses or savings so you’re not coming up short.  There are several apps that offer features to easily see what you've spent and how those expenses may have changed throughout the year.

It's easy to set aside these kinds of a tasks for a more convenient time than the holiday season but most of these shouldn't take too much time and are valuable.  With all of the holiday glitter and fun that is grabbing your attention don't forget to add these financial items to your holiday checklist!