The end of the fiscal year is nearly here. For many of us, it’s a good time to reflect on the events that impacted the last year and look for an indication of what’s ahead. In my household, that means it’s also time for the annual review of our finances and to make any necessary adjustments in our spending or savings habits for 2023. This will also help us prepare for tax season and maximize our return. Although I never enjoy this task, I’ve created a financial checklist to make the task easier
2022 Year-End Financial Checklist
I can easily lose focus and get off-task, especially when it comes to completing unpleasant ones like balancing the budget and preparing taxes. But writing things down has been very helpful to me and makes the task seem less daunting. So, here’s my year-end financial checklist to make sure I don’t overlook anything important for the year to come.
Check the Current Status of Your Accounts
Get your free credit report to check your credit score.
This is a good place to start if you want to get a gauge of your current financial health. Not many people realize that you can get a free credit report from all three agencies every year. By monitoring your credit score, you can look for any black marks in your history that you can remove to help boost your score. It can also help you catch any errors or spot suspicious activity that may indicate fraud.
I also utilize the FICO score provided by my banks and credit cards to track my credit. It’s been a good year for me since I’ve had no new debts or factors that would lower it. In fact, I added a new line of credit, and my score increased by 10-13 points this year. Just remember that your score can change from month to month and even between agencies.
Check the balances of your savings and investments.
To calculate your net worth, you will need the total value of the assets in your portfolio. When you check the current balances of your savings and brokerage accounts, it’s a good time to review how much you have saved and lost during the entire fiscal year. And if it isn’t growing fast enough to meet your goals, then it’s time to rebalance and reallocate your assets.
It’s been hard to watch the stock markets this year, but you need to know your current financial standing. Luckily, I still have healthy savings. But, my portfolio has suffered through the market downturns. The good news is I’m only down about 10% while the market has experienced much more significant losses.
Review the performance of your retirement accounts.
This step can be done in conjunction with the previous one. However, I like to distinguish between them to see how much I have contributed this year so I know exactly how it will affect my tax return. And if the budget allows, I try to top off our contributions to take advantage of the tax benefits as well.
My husband and I have both had a good year professionally. I had a significant salary and was able to invest more than the previous year. After I opened a new IRA, I doubled the contributions to my accounts for 2022.
Tally your outstanding debts.
With interest rates increasing, it’s also wise to review your outstanding balances on credit cards, loans, and any other debts you have. Even if the rates increase, you can ensure that you stay on track to paying down your balances and becoming debt-free.
Our household seems to have done well in this category as well. We haven’t accrued any new debt and managed to pay off all our balances every month. This has put us in a great financial position.
Review Your Budget
Review your spending over the last year.
Once you have assessed your balances, the next step is to review your budget. If you already track your spending to see where your money is going, this should be simple. And, it can also bring some bad financial habits to the forefront. When you create your budget, prioritize the things that matter most.
Although this year I’ve been spending more on home repairs and self-indulgences, I have still managed to handle all my financial obligations with a little room left in the budget for these additional expenses.
Ensure that you are living below your means and hitting your savings goals
If you are over budget, then you will need to find ways to eliminate unnecessary expenses or increase your income. You will also need to adjust your savings strategy as circumstances change.
Since I’m in a more stable position this year, the salary increase gives me an opportunity to fast-track my savings goals. And, it will also give us a chance to get ahead of a few large expenses and events happening in 2023 by increasing our savings rate.
Manage Future Risks
Contribute to your emergency fund.
You have to prepare for life’s uncertainties. Having an emergency can prevent financial strife when unexpected expenses happen. So if you don’t have one, it’s a good time to start one.
Financial advisors suggest that you save enough to cover three to six months’ worth of expenses if you ever find yourself between jobs. These funds can help pay for large, unexpected costs like home and car repairs or medical emergencies. And, it will help you avoid the high interest rates when you use credit cards.
For these reasons, we keep two emergency funds. The money in our HSA account is allocated for medical emergencies to cover the deductible. But, we also keep a dedicated savings account for other surprises that life throws at us.
Balance your portfolio.
The end of the fiscal year is an important time to review your portfolio’s performance for 2022. We all know it’s been a tough year. Therefore, it’s crucial to regroup and discuss your strategy with your financial planner. You may need to make adjustments based on the current market conditions.
Although I have already reallocated assets when the economy first started signaling a recession, it was time to check back in. We decided to also add a few low-risk holdings with steady long-term gains to diversify the portfolio and mitigate risks. However, this may all change yet again if the market continues continue to fluctuate through 2023.
Review your insurance policies
The final item on my checklist is to review our insurance policies. You may need to revisit your healthcare coverage if you are you facing a life-changing moment like marriage or children. Do you have enough coverage, or would changing your policy provide financial benefits? Does a Health Savings Account make sense for you?
We have also decided to reassess our life insurance policies since circumstances have changed. As we look back on the last year, we also want to keep an eye on the future.
Final Thoughts and Financial Checklist Items
Keep in mind, this is a list that I have created for myself which has been helpful over the years. However, it isn’t exhaustive or appropriate for every financial situation. But, it’s a good starting point. And, many items on this list work together and depend on each other.
The will to take charge of your finances is important, but it requires action. Putting a year-end financial checklist in place is a good way to ensure you follow through with your plans. Discuss your situation with your financial planner and choose which strategy and financial options are best for you.
- Creating A Budget You Can Stick To In 3 Easy Steps
- What’s the Difference Between a Rainy Day Fund vs an Emergency Fund?
- How Often Should a Retirement Plan be Reviewed?
Jenny Smedra is an avid world traveler, ESL teacher, former archaeologist, and freelance writer. Choosing a life abroad had strengthened her commitment to finding ways to bring people together across language and cultural barriers. While most of her time is dedicated to either working with children, she also enjoys good friends, good food, and new adventures.