The end of the year can mean different things for different people. It may be a time of reflection and relaxation. Or, perhaps a scramble as you travel across the country to visit friends and family. In either case, setting aside time to focus on your finances is a good idea, and a financial planning checklist can guide the way. <\/p>\n\n\n\n
Here\u2019s an admittedly ambitious list. Pick and choose what makes sense for you based on your circumstances and goals, or check them all off if you\u2019re in the overachieving mood.<\/p>\n\n\n\n
Whether you\u2019re working to pay off debt, saving for a big purchase, or planning an imminent retirement<\/a>, the fourth quarter is the perfect time to solidify your financial goals for the upcoming year. <\/p>\n\n\n\n Set yourself up for success in 2020 with an annual budget. If you\u2019re already using budgeting software<\/a>, use it to evaluate your spending over the past 12 months and discern your average monthly expenses<\/a>. If not, use this time to set up a budgeting app for the new year.<\/p>\n\n\n\n Anticipating any large, one-time purchases next year, for example home maintenance costs or holiday gifts? Consider starting a sinking fund<\/a> to spread out those expenses. <\/p>\n\n\n\n Year-end bonuses and holiday cash gifts can fly through your fingers if you don\u2019t have a better plan for those funds. Earmark the money to replenish savings, pay off debt, or top off your retirement account. <\/p>\n\n\n\n Research opportunities to reduce expenditures so you can re-allocate those funds to your high-priority goals. Call your internet, mobile phone, and TV service providers and try to negotiate<\/a> for a lower-rate plan. Use online comparison sites to find auto and home insurance quotes that may be less than what you\u2019re paying.<\/p>\n\n\n\n If you\u2019ve got high-rate credit card debt or a personal loan, make paying off that debt a priority. Research different approaches, such as the debt snowball or avalanche strategies<\/a>, and consider refinancing to lower your interest rate.<\/p>\n\n\n\n You can request a free copy of your credit report from each of the major bureaus\u2014Equifax, Experian, and TransUnion\u2014at least once every 12 months on AnnualCreditReport.com<\/a>. Look for errors (which you can dispute) and accounts you don\u2019t recognize (which may indicate fraud). Additionally, there are many services that will give you free access to your credit reports and credit scores<\/a> throughout the year, along with notifications if there are any potentially suspicious changes. <\/p>\n\n\n\n Revisit your investment portfolios to ensure they\u2019re still in line with your goals and risk tolerance (an investment tracking tool <\/a>can help). Consider rebalancing<\/a> if they\u2019re not.<\/p>\n\n\n\n Look for opportunities to harvest capital gains or losses<\/a> before the end of the year. For example, selling investments at a loss can help offset capital gains you\u2019ve realized in the same year. Work with your tax or financial advisor to figure out the best way to apply this strategy to your situation.<\/p>\n\n\n\n Making a habit of increasing your retirement contributions by a small amount each year\u2014even just one percent\u2014could make a big difference in the long run. And there\u2019s a good chance the slightly smaller paycheck won\u2019t have much of an impact in the short term. <\/p>\n\n\n\n Use the IRS\u2019s new tax withholding estimator<\/a> to make sure your employer isn\u2019t withholding too much (or too little) money from your paychecks. This isn\u2019t only part of your year-end tax planning checklist, either. You\u2019ll want to recalculate your withholdings every time there\u2019s a change in your or your spouse\u2019s income and after major life events. <\/p>\n\n\n\n The deadline to convert a traditional IRA to a Roth IRA<\/a> is December 31st, so now\u2019s the time to consider whether this strategy might be for you. The basic idea is that you\u2019ll pay taxes at the time of the conversion, but future withdrawals (after you turn 59 \u00bd) will be tax-free. If you think your tax bracket will go up in the future, talk to your tax advisor ASAP.<\/p>\n\n\n\n IRA contribution deadlines aren\u2019t until next April, but you can take a load off your tax season plate by opening or adding to an individual retirement account (IRA) now. You may be able to reduce your taxable income for the year if you\u2019re under the income limits<\/a>.<\/p>\n\n\n\n The deadline for taking your first IRA required minimum distribution (RMD) is April 1 of the year after you turn 70 \u00bd, then December 31st every year after. Even if you\u2019re not there yet, you may still need to deal with RMDs if you inherited an IRA<\/a>. <\/p>\n\n\n\n If you can\u2019t spend down your Flexible Spending Account (FSA)<\/a> before year-end, review your policy to find out if you\u2019ll forfeit the funds. Some companies let employees rollover up to $500 or give them a two-and-a-half month grace period. <\/p>\n\n\n\n2. Create an Annual Budget<\/h2>\n\n\n\n
3. Start a Sinking Fund<\/h2>\n\n\n\n
4. Use Your Windfalls Wisely<\/h2>\n\n\n\n
5. Look For Ways to Save<\/h2>\n\n\n\n
6. Make a Debt Payoff Plan <\/h2>\n\n\n\n
7. Check Your Credit Reports<\/h2>\n\n\n\n
8. Rebalance Your Investments<\/h2>\n\n\n\n
9. Harvest Capital Gains and Losses<\/h2>\n\n\n\n
10. Increase Retirement Plan Contributions<\/h2>\n\n\n\n
11. Update Your Tax Withholdings<\/h2>\n\n\n\n
12. Look Into a Roth IRA Conversion<\/h2>\n\n\n\n
13. Open or Add to an IRA<\/h2>\n\n\n\n
14. Read up on Required Minimum Distributions<\/h2>\n\n\n\n
15. Don\u2019t Let FSA Money Go To Waste<\/h2>\n\n\n\n
16. Make Charitable Contributions<\/h2>\n\n\n\n