Financial Planning Tasks to Complete Before 2023

Tips for End-of-Year Financial Planning

The start of a new year can feel like a special time because it’s brimming with the promise of new beginnings, second chances, and opportunities. As you reflect on the previous 12 months and set your sites on the year ahead, consider positive changes you can make in your finances. Below you’ll find helpful end-of-year financial planning tips to enhance your financial outlook and set yourself up for future success.

#1. Review your assets and liabilities.

Getting better organized with your finances is a good habit to develop, and your end-of-year financial planning will benefit from a quick review of all your assets and liabilities. Get a clear picture of what your finances look like – and where there’s room for improvement – so you can move forward with clarity.

To start, gather statements for all your bank and investment accounts, any loans you’ve taken out, debts you may owe, and anything else related to your financial situation. Then you’ll want to make a list of how much money is coming in and from where, and how much money is going out and to where. This can lead to anxiety for some people but, no matter what you discover, be sure that you meet yourself with understanding and grace and remember that wealth management is a process that evolves over your lifetime.

#2. Envision what you want for your future and create strategic goals.

In step one above, you get a clear picture of where you are. The next logical step is to think about where you want to be – and how to get there. Think in terms of both short- and long-term goals and make them specific with amounts and dates. The more detailed you are with your goals, the easier it will be to create tangible steps to accomplish them. Detailed goals can also help make herculean tasks like ‘Paying off Debt’ or ‘Saving for Retirement’ feel more manageable.

#3. Build a budget and commit to abiding by it.

Once you’ve set your goals, create your roadmap for accomplishing them. Your budget is what will help take you from point A to point B. If you don’t yet have a budget in place, make this a step you spend time on in your end-of-year financial planning. Regardless of your income, having a budget in place helps ensure that you’re not living outside of your means and helps hold you accountable as you work towards your goals.

You can use your own spreadsheet and calculations for your budget, or you can turn to a user-friendly budgeting app. Be sure to use your goals as a frame of reference to determine how much money you should be putting towards saving, investing, and paying off debts. Chances are you won’t be able to tackle every goal simultaneously, so you’ll have to decide which goals you want to prioritize, too.

#4. Take care of tax prep for the upcoming season.

With each new year comes a new tax season and, while April may seem far off, it will come more quickly than you think. While you’re already focused on your finances, now is a great time to get any paperwork and other documents you may need in order so that you’re prepared when the time comes to file your taxes. Take time to speak with a tax professional to ensure that you’re making the most of any tax benefits available to you and doing what you can to mitigate your tax burden.

If you’re expecting a tax refund, make a plan now for where you want that money to go. It can be tempting to spend it all if you don’t give those dollars a job, so use you goals as a guide and create a smart tax refund strategy as part of your end-of-year financial planning.

#5. Revisit your retirement and investment accounts.

The earlier you begin saving for retirement, the better. So, where does your nest egg stand? It’s typically recommended that you put 10 – 15% of your income towards your retirement savings if possible, whether that’s through an employee-sponsored 401(k) or your own personal IRA. If you’re using a 401(k) through your employer, see if they offer to match your contributions and be sure that you’re contributing enough to qualify. As for your investments, now is the time to review your asset allocations and be sure that your portfolio is properly balanced to reflect your risk tolerance and retirement timeline.

#6. Consider buying insurance.

If COVID-19 taught us anything, it’s that we never know for sure what the future will bring and it’s important to be prepared for the unexpected. This is especially true if you have children or people dependent on your income. If you haven’t purchased insurance yet, look into life insurance and disability insurance first so that you can have peace of mind knowing that your loved ones will be protected should something unexpected happen to you. If you already have policies, reevaluate the details to ensure they still meet your needs and update your beneficiaries if any changes have occurred.

Another money-saving option when it comes to your mortgage is to sign up for autopay. Many lenders provide a reduced interest rate for anyone who sets up automatic payments for their mortgage bill. Additionally, you could think about splitting up your monthly bill into bi-weekly payments. While this may seem like a small thing at first glance, it ends up being one extra mortgage payment each year which can add up in the long run.

#7. If you haven’t done so yet, begin planning your estate.

Nobody enjoys thinking about their own mortality, but none of us live forever nor can we be certain how much time we’ll have. If you don’t have a will and/or trust in place, make a goal to complete your estate plan as soon as you can. Doing so ensures that those you’re leaving behind will understand and respect your wishes. If you have children or dependents, it becomes even more necessary to prioritize this task so you can rest easy knowing they will be taken care of after you’re gone.

Final Thoughts on End-of-Year Financial Planning

You deserve to live a life that’s free of financial stress, but it’s not going to happen without discipline and planning. While working through end-of-year financial planning and developing a comprehensive wealth management strategy on your own is doable, research shows that working with a financial advisor increases your chances of success.

As you enter a new year, take the opportunity to partner with a professional who can help you achieve your goals and gain confidence in your plans. At Arbor, we are committed to helping you see your vision through. Contact us today to learn more about our wealth management and investment management services. We look forward to hearing from you!

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