Council Post: 14 Essential Personal Finance Checks To Do Before The End Of The Year

While keeping tabs on your personal financial health should never be neglected, the end of the year is the perfect time to review your budget, investment portfolio and any recent financial decisions to ensure you’re on track to meet goals and to determine if adjustments are needed. Such a review needs to be thorough if you’re to spot any weaknesses and build on strengths.

From checking your spending to reviewing your credit report, it’s important to ensure you’ve covered every base when carrying out an annual personal finance review. Below, 14 Forbes Finance Council experts share important financial factors everyone should review at the end of the year.

1. Analyze Where Your Money Went

Every consumer should check where they spent their money during the year—was there a savings goal, and was it met? Understanding the inflow and outflow of cash will help you to review lessons learned. Not reviewing your cash flow is not being honest with yourself, and you won’t be able to see if you can do better next year—you may be able to save more, and you may see that some of your spending in the last year was unnecessary. – Nike Ajao, Spitfire Strategies

2. See If You Spent More Than You Made

Start by getting real with your finances. One question you can ask yourself is: Did I spend more money than I made this year? If the answer is “yes,” there may be a potential debt problem on hand. Don’t worry though, there are many simple fixes if you start the next year on track! Use a spreadsheet to make sense of your numbers so you can break down and tweak your expenses versus your salary. – Will Murphy, Everlasting Capital

---

Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?

---

3. Review Your Budget Versus Spending

First, whether it’s for professional or personal reasons, checking your budget spending is crucial to sustainability. It is important to understand if you are overspending or underspending, as that will help you with cash and savings management for the upcoming year. Second, when monitoring one’s debt and savings levels, ask yourself if they are manageable and within reasonable ratios. – Bilal Surahyo, Sleep Country

4. Do A Pro Forma Tax Forecast

I would do a pro forma forecast of taxes. That can help you make adjustments as needed before the end of the year, whether it is through charitable contributions or changing the timing of some expenses based on cash flow, projections and, of course, taxes. – Vivek Sinha, Janus Advisory and Consulting Services

5. Review Your Credit Report

It’s important to review the information contained in your credit report and verify that it’s accurate. While an incorrect balance or missed payment can negatively affect your score, an unknown credit inquiry or open account could be the first sign of identity theft. Consumers are entitled to a free credit report annually at annualcreditreport.com. – James Garvey, Self Financial, Inc.

6. Correct Any Errors In Your Credit Report

Pull and review your credit report. About one-third of consumer credit reports contain errors. The best way to find those errors and fix them, thereby improving your credit score, is to review your credit report. Moreover, reviewing your credit report is your first line of defense against identity theft. Look for credit products or applications that you did not initiate. – Evan Siegel, eGain

7. Check Recurring Expenses For Increases

What’s causing the most stress on your income or expense budget can vary from year to year. One area to check during a high-inflation year is your consistent yearly expenses and any cost increases that have occurred without a corresponding growth in your consumption. Reviewing consistent lifestyle costs against increases will let you know what kind of room you have to build a buffer to offset unexpected events. – Matt Dixon, TruNorth Advisors

8. Review Charitable Contributions

For most of my clients, our year-end meeting consists of reviewing charitable contributions. We review what they have already contributed and what else we can look at to lower their upcoming tax bill. Charitable contributions are not only great for one’s community, but also provide some great tax benefits for high-income earners. – John King, Dakota Wealth Management

9. Determine If You Have Enough Liquid Savings

Ask yourself: Are my liquid savings where I want them to be? Everyone should have at least six months’ income saved in a liquid account for easy access in an emergency. Perform an annual assessment of your finances and determine if you have the needed funds and/or a plan to build your savings up to your desired balance. This is also a good time to determine if your bank is paying a competitive APY or charging fees you could avoid. – David Herpers, Credit One Bank

10. Cut Out Unnecessary Expenses

Look over your annual budget and cut out expenses that you might not necessarily need—especially anything that recurs on a monthly or yearly basis. Weeding out excessive expenditures from your budget will help ensure you have more spending cash for the new year and possibly more money to set aside for a rainy-day fund. – Ben Jen, Ben Jen Holdings SLLC

11. Review Your Personal Balance Scorecard

Every consumer should review their personal balance scorecard at year-end and revise it as needed. The scorecard should outline personal goals, objectives, performance measures and personal improvement activities. For example, individuals who have financial improvement goals with the objective to acquire personal property could have metrics that evaluate spending on discretionary consumption. – Charles Owo, Groupe SEB

12. Look Into Allowable Contributions To Retirement Plans

Take advantage of the IRS’ allowable contributions to your retirement savings plans. Look into your options: These include a 401(k), a Roth IRA or even a health savings account. Saving early and often is critical to achieving long-term retirement goals. Remember to “max out” your allowable contributions to all retirement accounts, taking advantage of the “catch-up” contribution if you are over 50 years old. – Sonya Thadhani Mughal, Bailard, Inc.

13. Update Your Beneficiaries

Check your beneficiaries on investments, bank accounts and other assets. New rules that have come into play over the last two years have changed the rules for inheriting assets, and proper planning on that front should be continually updated. Also, if you don’t already have powers of attorney in place, be sure to address that, too. This will help ensure your finances are protected in case of an emergency. – Matthew Cuplin, Midwest Financial Group

14. Update Your Estate Plan

You may have had significant life changes throughout the year—a new baby, a marriage or a move to a new state. This means your estate plan needs to change as well—it should be checked each year. Taking an inventory of all of your assets—including digital assets—and creating or updating documents including your will or trust are critical to successful planning. – Renee Fry, Gentreo, Inc.