A Year End Financial Checklist Busy Professionals Will Actually Want To Use

The New Year is almost here!

Before we dive into 2023, consider taking time to reflect on your finances from 2022. We have clear, simple steps to help you get an overview of your finances so you can start the New Year off on the right foot.

Key Takeaways:

If you’re not where you’d like to be financially, don’t get discouraged. Instead, use it as an opportunity to grow.
Your short and long-term goals may have changed over the year, and that’s okay! There are ways to pivot your plan without completely derailing your savings goals.
Your financial advisor is here to help you manage your finances so you can spend your energy wisely on the things that matter most to you.

Create Your Financial Inventory

Before evaluating your goals, it’s essential to check in on your financial inventory.

Use this checklist to get the vitals of your current financial situation:

List your assets: Emergency fund, retirement accounts, investment accounts, savings accounts, real estate equity, other personal items, etc.
List your debts: Mortgage, student loans, credit cards, car loans, medical bills, etc.
Look at your current credit report and score: You can use free online tools to evaluate your credit score without appearing as a credit check. Or, you can contact your credit card company and ask them to help you.
List your recurring expenses: utility bills, insurance payments, mortgage, etc,

Get A Pulse On Your Short and Long-Term Goals

If you have short and long-term financial goals, it’s time for a progress check!

Let’s use an example short-term goal of “pay off car payment before the end of the year”.

Ask yourself these questions:

Did you meet the goal?
If not, what needs to change?

If you didn’t meet your goal, don’t let it discourage you. Use it as an opportunity to change your approach. So, what needs to change to help you achieve your goal? Do you need to spend less on eating out or lower your monthly payment to make it more manageable? Whatever it is, adjust your goal accordingly and try again.

What about your long-term goals? Let’s say your long-term goal is to save enough funds in a 529 plan to help your child pay for their first year of college.

The average annual cost of college tuition in 2020-2021 was $19,020, and that’s without other fees, housing, books, etc.

Let’s say your child is 10 years away from going to college. Sources say that the cost of college has increased more than 25% in the last 10 years, so let’s use that as a general estimate of how much you need to save. Using the 2020-2021 data, this means you’ll need to save approximately $24,000 for your child’s first year of college.

With that in mind, how are you progressing? Annually, you’ll need to be saving $2,400 to add to your 529 plan. Based on your progress, ask yourself these questions:

Are you on track to achieve your long-term goal?
If not, what needs to change?

If you’re not on track, again, don’t let it discourage you. Long-term goals are bigger for a reason because you simply have more time to achieve them. If you’re falling behind on where you’d like to be, make small changes that push you in the right direction.

Do Your Goals Still Reflect Your Values?

Having a financial plan that can adapt is important. So, ask yourself if your goals are actually still your desired goals!

If you’ve found joy in spending time traveling with family within the last year, make it a goal of yours to continue to be intentional about spending money on traveling.

But, it’s important to not completely derail from your overall savings plans. In essence, don’t let your new love of travel keep you from contributing to your retirement savings. There are ways to pivot your goals and financial plan without completely starting over.

Knowing how to save and spend money is what it is to be good at finance. So don’t be afraid to spend in the areas that bring you joy.

Assess Your Cash Flow Plan

On the topic of spending, it’s time to take a peek at your cash flow plan.

An important part of having a cash flow plan is that is something that is realistic and easy to follow. Ask yourself if you’ve been able to follow it, and if not, what needs to be adjusted.

Maybe you had another child enter school this year and you needed to spend more on school supplies. Or, your family decided to get a pet so you have more monthly expenses in terms of pet insurance, food, toys, etc.

Did you spend your money well? Purchasing a new car is a great example. While the “newness” of the new car may have worn off, the payments haven’t. Is this still a purchase you’re happy with? If not, how can you avoid purchases like this in the future?

Whatever your cash flow plan is, make sure it makes sense for your family.

Review Your Retirement Savings

As you age, saving for retirement only becomes more important. Keeping an eye on your savings while you still have time to make adjustments can save you a lot of stress down the road.

There isn’t an exact number you need to save for retirement. The best way to plan appropriately is by working with your financial advisor. They will help you figure out your retirement lifestyle plan and help you set the goals you need to get there.

If you already have an idea of how much you’d like to save, then check in on your progress. Do you want or need to contribute more to reach your goals? Or, do you want to contribute to a Roth IRA in addition to your 401k?

While it may seem like retirement is far away, saving for retirement is a lifetime strategy.

Examine Your Investments

The best investment strategy is one that grows with you over time. Have you evaluated your portfolio recently?

Of course, every investment involves some level of risk. But, your risk tolerance should adjust over time to reflect your season of life.

For example, as a young working professional, placing more assets in riskier investments like stocks may benefit you. While the potential for large gains is there, it also allows you time to recover in the instance you incur a loss.

On the other hand, when you’re nearing retirement and want to maintain your investments rather than continue to earn, your portfolio should be heavier on less risky investments like bonds.

Work with your financial advisor to check in on your asset allocations and risk tolerance level. By ensuring your portfolio is diversified and at the right risk level you’re setting yourself up for potential gains.

Start The New Year On The Right Foot

A New Year means a new chance to take your finances to the next level.

As a busy working professional, you may not have enough time to dedicate to managing your finances. Don’t be afraid to reach out to a professional financial advisor for help.

We’re here to help you manage your finances and reach your goals so you can focus on what’s important to you. So, rather than keeping a watchful eye on the stock market, you can watch your children’s sports games.

If you’re ready to evaluate your finances and take your money to the next level please reach out to us today.