December is a great month to look back and see how well you did financially. Assess to see what you accomplished financially and then make new plans to see what you can do better for the upcoming new year. This process is called a year-end financial check-up. Let’s dive into it!
Disclaimer: I am not a financial planner or expert. All information in the post is my opinion and should not be used as financial advice. This is based solely on my experiences. Any action you take based on the recommendations from this blog is at your discretion.
STEP ONE of Year-End Financial Check-Up: Current Financial Status
Net worth
The first thing to do is to determine your net worth (or update it!). Review this post: How to Calculate your Net Worth. The process of determining your net worth is an extremely useful exercise. You can see how much debt and savings you have and how well your investments are doing. Net worth is basically a financial snapshot of where all of your money is. I recommend calculating your net worth at least twice a year. It’s neat to see what your financial status was 6 months ago and it useful for planning out the next 6 months.
Retirement accounts
Make your final contributions to your retirement accounts for the year with the goal of maxing them out. For Canadians – you have till March 1st to make your RRSP contributions.
Benefits
Some benefit plans allow you to spend only a certain amount on an expense per year. For example, some plans allow a certain amount of money for vision care or massages. Use up these benefits and submit your receipts for these expenses before year-end.
Rewards and Gift Cards
Check the amounts of all of the rewards you have collected over the past year. (Air miles, travel points, store-specific rewards, credit card rewards.) In addition, round up all of the gift cards you have received over the year. Understanding how much you have will help you plan and use them well in the new year.
Subscription and fees
Review all of the subscriptions you have. Cancel any that are no longer used or worthwhile. Renegotiate cable/cellphone/internet bills, bank fees, and insurances (home/car).
STEP TWO of Year-End Financial Check-Up: Financial Planning for the New Year
Make new money goals
Now that you have a snapshot of your current financial standings, you can come up with your money goals for the new year. Do you want to focus on paying off more debt? Save up for that dream vacation? Save up for a new car, house, or perhaps for a new addition (baby/pet?) to the family? Maybe you want to focus on better money management or investing. Or you need to increase your emergency and other savings funds.
You should also take into consideration what your goals are for the next 3, 5 and 10 years. (Short term and long term goals.)
If you don’t know where to start, sign up for the free “Back to Basics Financial Email Course” to help you get started with getting in control of your finances. Sign up here:
Update budget
The next step is to review and update your budget! After doing your net worth and setting goals for the new year, updating your budget will help you meet your money goals. If you don’t have a budget, then this is the perfect time to create one!
Need help? Check out: Budgeting 101
Taking some time to do a year-end financial check-up, will make it significantly easier for you to financially plan for the upcoming new year. Yes, it will take some time to go through the review but this year-end financial checkup will ultimately improve your finances to set you up for a better life.
GOAL: Let’s be effective and efficient with our money in order to live a more fulfilling life 🙂
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Ohhhhh, I never thought about adding in all my reward points! Good call as frequent flyer miles can add up to a hefty $$$! Thanks!
These are great tips! I actually don’t use a budget because I find them to be limiting, but I think tracking net worth is very important. Thanks for sharing this! 🙂
You’ve inspired me to do this! I really need to get better at checking on our finances and budget more often.