A Personal Finance Year-End Checklist for 2017

As the year comes to a close and the holiday period is underway, the time you spend with loved ones, vacations or trips you are planning, shopping and entertainment options may be on your mind a lot. It is a time to relax and unwind. It’s also a time though to take stock of your year and your personal finances. Becoming organized about your financial planning is important for a healthy and productive new year. Here’s a checklist of the essentials for your personal finances at the end of the year.

Check Your Spending Habits

How are you spending? What did you spend money in the last year? If you use budgeting software like Mint, you can pull up both annual and monthly data and see your expenses in categories. Whether you use software online or just your checkbook directly, it is important that you know your spending habits. Understanding your spending habits is critical to creating a strong financial foundation as you can plan for your immediate future accurately. (For more, see: 6 Budget Must-Haves.)

Create Savings Goals and Budgets

After checking your spending habits and taking into account your monthly essential payments that must be made (rent/mortgage, insurance, credit card, student loans and more), see how much money you have left over that you can allocate to savings. Develop a budget for savings specifically for 2018. You can set as many budgets as you want with specific goals in mind (pay off credit card, buy a car, pay for college, pay for kid’s education, travel fund and the like). After you have determined how much money you have to save based on 2017’s earnings and expenditure, you can prioritize your savings goals.

Automate Your Savings

Next, automate your savings as best as possible. When you have $500 extra in your account for example, it is easy to spend it on the next product that is on sale over the holidays. You could also invest extra funds. By automating savings, you take the guesswork out and remove pressures while insuring that your savings are constantly growing. By saving regularly, you will have more cash than you need on hand and enjoy both peace of mind and more options. Far too often people put off savings, thinking they can do it when they are older or when they have achieved other goals first. Saving regularly and often is essential to growing your wealth.

Pay Down Debt

As much as you can, pay down debt. This can range from your credit card to lines of credit, student and personal loans. Credit cards can easily charge anywhere from 18% to 29% on outstanding balances. That is a lot more money than you borrowed initially. Pay off as much of the balance as you can every month. In terms of student loans, consider paying them down and possibly refinancing your loans if they charge 6% or more. (For more, see: How to Build an Emergency Fund.)

Set Up or Add More to Your Emergency Fund

If you don’t have one already, set up an emergency fund. Having an immediate $1,000 available for any emergency is advisable. You may find you want to put aside more than that for your specific expenses, whether it’s anywhere from one to six months of expenses.

Add Money to Your 401(k) Account

Add as much as you can to your 401(k) account that your employer can match. If your employer does not match your contributions, you can put your savings into a Roth IRA.

Roll Over an Old 401(k) into an IRA

Many 401(k) plans offer lower rates of return. If you have changed jobs or are going to, you can roll over your old 401(k) into an IRA account.

Use Your FSA

Your health flexible spending account, or FSA, helps you pay for additional healthcare expenses. It is meant to be used during the year. If you don’t, the cash can sometimes be forfeited. Check with your specific plan on the options available to you. Many plans today offer the option to carry over into the next year.

Organize Tax Papers, Contribute and Plan

Gather your documents that you will need for your tax filing in April 2018. You can claim any tax credits such as a residential solar energy property credit (available till Dec 31, 2021).

Give a contribution to a charity that is tax deductible. Every year there are events that make certain people and places more vulnerable than others. In the year 2017, there were tragedies that created suffering on a national level. From hurricanes to mass shootings, there are plenty of opportunities to give to a cause you believe in. You can receive a small tax write-off for this.

If the stock prices for your employer’s company dropped, you may want to wait to exercise your stock options until 2018. This also means that you will defer any tax owed until April 2019.

Check Insurance Policies

Check the coverage you have if anything happens to you or your loved ones. Review your coverage for life changes. You may want to add more coverage. You can also discuss the coverage that your parents have, especially if they are older, retired and have healthcare expenses.

Contribute to a 529 College Savings Plan

Plan for your child’s college education with a 529 college savings plan. Enroll early and grow your savings tax free. If you have extra cash available, add more to this account beyond the $14,000 annual contribution limit. Any parent can add up to five years of contributions or $70,000. This means a married couple can put aside $140,000 for a child and benefit from compound growth over time.

By doing these essential steps, you are making active progress towards protecting your future, achieving your long-term goals, growing your wealth and building a strong financial foundation. (For more from this author, see: Set Specific Goals to Manage Your Wealth Better.)