End-of-Year Financial Checklist: Key Steps for Your Financial Well-being

As the year draws to a close, it’s a great time to focus on your financial health and ensure that you’re set up for success in the year ahead. The holiday season, while busy and filled with family gatherings, also provides a unique opportunity to review important financial matters, especially with loved ones. Whether it’s keeping everyone informed of changes in your estate plan, tracking your yearly expenses, or ensuring beneficiaries are correctly designated, these proactive steps can help avoid problems down the road. Let’s dive into some important considerations for this time of year that will benefit you and your family for years to come.

Keep Your Family Informed

With many families reuniting for the holiday season, it’s a natural opportunity to discuss and share any updates to your financial or legal documents. In today’s connected world, technology like FaceTime and Zoom helps keep families in touch, but an in-person conversation during a holiday gathering can be more impactful.

Here are some essential steps you should take to ensure your family is informed and prepared:

• Review your legal documents: Make sure your powers of attorney (POA), executors, or trustees are up to date and know their roles.
• Update beneficiaries: If there have been any changes (additions, removals, or adjustments in percentages), communicate these updates with your family.
• Explain financial arrangements: If you’ve made loans, gifts, or forgiven debts, ensure your loved ones understand these actions to avoid confusion later.
• Discuss financial resources: Make your family aware of your investments, savings, and retirement accounts, especially if you might require long-term care.
• Avoid account-specific beneficiaries: Refrain from assigning specific beneficiaries to individual accounts, as this could lead to unintended disinheritance. Consider a balanced approach across all assets.

By taking these steps, you’ll minimize the chances of misunderstandings and prevent any future family conflicts when it comes time to settle your estate.

Review Your Estate Plan to Avoid Pitfalls

An often-overlooked aspect of estate planning is the designation of beneficiaries on accounts. You might have intended for one child to receive a particular account, while another child is earmarked for a different one. However, these decisions can lead to complications, especially if one account is liquidated to cover expenses, such as long-term care. This can result in accidental disinheritance and unfair outcomes.

To avoid this:

• Revisit your beneficiary designations: Ensure that your assets are fairly distributed across your estate, rather than assigning specific accounts to individual heirs.
• Consult with your financial advisor: We can help you ensure your estate plan is well-balanced and designed to minimize potential family disputes.

Understanding Your Finances Through Expense Tracking

Tracking expenses is one of the cornerstones of a healthy financial plan, and it’s essential whether you’re preparing for retirement or already living in it. As we approach the end of the year, now is the perfect time to review your spending. This will help you plan for the future and ensure that you’re living the lifestyle you desire without overspending.

Here’s a step-by-step guide for tracking your expenses:

• Gather your financial documents: Collect bank statements, receipts, and any other relevant financial records from the past year.
• Review your spending categories: Take note of your regular expenses like mortgage or rent, utilities, and entertainment, but also include fun purchases like vacations and family events.
• Compare cash balances: Look at your cash balances from January 1st of this year and compare them to where they are now. If your balances went up, you spent less than you earned; if they went down, you spent more than you earned.
• Check for discrepancies: Make sure your income and expenses match up. If not, you might be missing some expenses that need to be accounted for.

How to Analyze Your Financial Year

Once you’ve completed your expense tracking, it’s time to analyze how well you’re doing financially. Here’s how:

• Compare your income with your expenses: Check if you’re spending within your means. If you’ve spent less than you earned, great! If you spent more, it might be time to reassess your spending habits.
• Review your categories: Are there areas where you’re overspending or underspending? You may discover certain categories where you can make adjustments.
• Plan for the future: Use this review to inform next year’s budget and spending plan. This ensures you’re staying on track with your financial goals.

Set Yourself Up for Success in the Coming Year

After completing this year-end review, bring your findings to your next financial planning meeting. This will allow us to assess how well your spending and savings align with your retirement or long-term financial goals.

Steps to ensure success in the coming year:

• Bring your expense tracking to your advisor: We’ll analyze it together and make necessary adjustments to your financial plan.
• Discuss potential cutbacks or adjustments: Together, we’ll see if any spending areas need trimming or if you’re right on track.
• Stay on course: Regularly tracking your expenses will help keep you aligned with your financial goals and avoid surprises.

Final Thoughts

By proactively addressing your financial planning now, you’re taking essential steps toward safeguarding your family’s future and avoiding potential conflicts. The holiday season, while full of joy and togetherness, also presents an excellent opportunity to make sure your estate plans are in order, your family is informed, and your finances are aligned with your goals.

These key steps can help ensure a smooth, secure financial future:

• Keep your family informed: Update your legal documents, beneficiaries, and ensure everyone is on the same page.
• Track your expenses: Use this quiet time to review your financial year and plan ahead for next year.
• Analyze and adjust: Bring your expense tracking and findings to your financial advisor for a thorough review.

Remember, these conversations and reviews don’t have to be stressful — they can provide peace of mind and pave the way for a smooth, secure financial future.