"Year-End Personal Finance Checklist" - the signature financial topic, which you come across every year. Most of us either ignore the checklist or don’t like to consider it.
But, year-end is the ideal time to review your financial health. So, instead of getting overindulged in the shopping, Christmas fun, and merriment, give attention to get your finances in order.
Following is a checklist that helps you to understand what activity you should complete.
Review where your money went in this year. You can check your credit card bills or bank statements to know where you have spent more. By doing so, you will understand how to spend money in the coming year.
Thus, you can restrict yourself from doing the same in the next year.
You should evaluate your savings to know how much you have saved and how much you still need to save. Since there are multiple savings goals that you need to achieve, you should be watchful whether or not each goal is running well.
You should know whether or not the emergency fund is enough to cover any unforeseen expenses that arise in the coming year. If there is not enough fund to cover at least 3 to 6 months' worth of living costs, then you should give extra effort to save enough money on your emergency fund.
Revisit your budget to make changes so that you can save enough money on your emergency fund.
Thus, you will be able to protect yourself against painful surprises. And, you will not be in debt to manage an emergency.
End of the year is the right time to determine your net worth. Check how much money you have saved.
How can you do that? Checking the net worth is not difficult. You can do it online.You just need to download the app ‘Personal Capital’ to manage your savings.
Link your bank accounts, investment accounts, and another mode of savings to this app to know the net worth.
You need to save at least 25% of your monthly income into a savings account.
No 401(k) and no Health savings account (HSA)? These are also good savings vehicles you should consider.# Contribute money to 401(k) account
By contributing to a retirement account 401 (k) and traditional IRA, you can reduce the taxable income.In 2018, people who are under 50 can contribute up to $5,500 and people who are 50 or older can contribute up to $6,500
So, if you haven't saved money for your retirement, then you should start saving in the coming year. Remember, the earlier you start saving for retirement, the earlier you can achieve financial freedom.# Contribute money to Health Savings Account (HSA)
Since medical expenses are rising high, you should include HSA in your savings goal in 2018. HSA is now becoming one of the beneficial modes of savings. What are the benefits?
You should check the debt situation before entering the new year. If you are currently debt free, you should concentrate on other financial goals, like, savings, retirement, and investment.If you have debts including secured and unsecured, you should work on that to become debt free as soon as possible.
If you have credit card debts that are charging higher interest, you should work on them first to get rid of the expensive interest rate. Make a debt repayment plan to pay off the debts.You can either follow debt snowball or debt avalanche method to get out of debt on your own. You can also consider professional help to get rid of rigid debts.
In 2018, you may find increased mortgage interest rate. Thus, it will be better to lock a lower rate through mortgage refinancing.
Also, make sure you don’t miss the payments on the new loan.
You should also consider paying off your student loan debt by making regular payments.
You should try to pay off your existing debts and stay away from further debts. Thus, you shouldn't use credit cards randomly.Since the year end is the most enticing time to get overindulged, you should try best to stay within your means.
To do so, you need to plan your Christmas shopping, new year party, and other fun activities within your budget.Create a budget for the festive season and stick to it to avoid using credit cards to meet the purposes.
Also, don't use your credit cards excessively just to get reward points.Remember, nothing comes free; you will have to make the credit card payments within the stipulated time or else you will be in credit card debt shortly.
If you haven't yet automated your finances, then make sure you do it at the beginning of the new year. Thus, you can distribute the money where it requires to go like- debt payments, savings accounts, utility bills, and emergency fund.
By doing so, you can also achieve your various financial goals and manage your finances well.
This is the time to plan for upcoming expenses especially if you want to make big expenses. Update your budget as per the plan.By doing so, you will understand whether or not you need to cut down other less important costs or need to find an added source of income.
Lastly, I would like to suggest you to change the passwords of all the financial accounts to avoid scam.Also, year-end is the ideal time to review the credit report.
Make sure there are no wrong listings in your credit report, because errors or wrong listings can drop your credit score.
If you find any mistake in your credit report, dispute it with the 3 major credit bureaus.Though you have time until April 18th, 2018, to complete the tax task, this is the good time to make charitable donations not just to get tax deductions but to help people who need your help.