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The Year-End Financial Checklist All Families Need

by

Chladek Wealth

A growing number of  Americans overestimate their financial literacy.

With so many in the dark, it’s no surprise that  77% of Americans feel anxious about their financial situation. Confusion surrounding budgets, bills, and bank accounts can make it feel impossible to achieve your desired financial life. 

Replacing confusion with clarity is the best way to remove this doubt and put yourself on the path to financial freedom. 

The end of the year is the perfect opportunity to make sure you’re still on track toward achieving your financial goals. 

Use this year-end financial checklist as your guide.

Take Financial Inventory

Before setting goals and timelines, it’s important to check your financial inventory. 

Think of this checklist as the health evaluation of your financial situation. 

  1. List out your assets: Emergency fund, any retirement accounts, investment and savings accounts, real estate equity, etc. 
  2. List all your debts: Mortgage, student loans, car loans, credit cards, personal loans, business debt, medical bills, etc.
  3. Look at your current credit report and score: Several free online tools can help you evaluate your score (without a hard credit check). You can also call your credit card company and ask them to check it for you. 

Once you have this information, ask yourself if it’s what you expected. Do you have more assets? Fewer debts? A solid credit score? Where can you improve going into the new year? 

You may have just paid off your credit card debt and want to resolve to have more intentional spending and cash flow habits. We can work together to identify areas of improvement that put you on the path to reaching your goals. 

Do You Have an Emergency Fund?

Only half of Americans have an emergency savings account.

These accounts are vital to your financial security because they help protect you from life’s highs and lows, such as layoffs, medical emergencies, global health crises, etc.  

An emergency fund saves you from relying on high-interest debt options when you’re in a pinch (like a credit card or personal loan). When you need cash, you can simply use your emergency savings account for easy financing and peace of mind. 

How Much Do You Need in Your Emergency Fund?

Most financial experts suggest setting aside at least three to six months of emergency savings. However, families may want to hover closer to the six to nine-month mark. Why so much higher? You likely have other fixed expenses like education and the general cost of living, so it’s nice to have an extra cushion. 

If you cannot finance this account all at once, try pulling a set amount from your paycheck until your account is at a comfortable level. 

Review Your Short and Long-Term Financial Goals

Now, use what you learned in your inventory list to check on your progress toward your financial goals. 

For example, if your goal was to have a certain amount of your home equity loan paid off, did you meet that? If not, what needs to change to make it happen?

Write down each goal, the progress you’ve already made, and what actions remain. See if any patterns or behaviors are causing you to meet/not meet these goals. Perhaps you’re overspending on things that aren’t serving you, meaning you have to scrimp in areas that carry a lot of weight. 

Make a conscious effort to connect your spending to your values. When you do this, each dollar becomes more intentional, and you’ll actively start spending more on things that matter to you. 

Check-In on Your Retirement Savings

As you age, saving for retirement only becomes more critical. This is especially pertinent as your life becomes more financially complex and more of your money is accounted for—raising a family, giving back to your church/community, caring for aging parents, etc. 

How can you recommit to your retirement savings?

  • See how much you’re currently saving for retirement. Are you maxing out your workplace accounts? If not, perhaps you bump up your contribution percentage next year. 
  • Are you leveraging accounts outside your workplace, like IRAs (including Roth IRAs), HSAs, and brokerage accounts?
  • Do you need to alter or revamp your investment allocations or risk levels? 

The end of the year is a great time to make changes to your retirement plan. However, before making any big money moves, it’s always a good idea to consult a financial advisor. 

Audit Your Charitable Donations

Many families find immense joy in giving to causes and organizations that mean a lot to them. Whether you can give $10 or $10,000, your donation serves the community and can save you on taxes. 

So before you write a check, consider some potentially more advantageous options. 

  • Open a donor-advised fund. DAFs are charitable investment accounts that allow you to plan your giving and can make it easy to get your family involved. You take an immediate tax deduction upon contributing, the funds grow tax-free, and your donation remains tax-free, furthering the gift’s value. 
  • Give highly appreciated assets. Unless an asset is sheltered in a retirement account, you’ll have to pay capital gains tax when you sell it for profit. But if you donate that asset to charity, neither you nor the charity will have to pay taxes on the asset.
  • Bunch several years’ worth of donations into one. Doing this could be advantageous if you want to itemize your deductions. 

Charitable giving may be a deeply important part of your family’s life, and we’d like to help you create a strategy that amplifies your gifts and provides even more support to the causes that shape your life’s story. 

What’s Mine Is Yours: Review Your Family Financial Goals and Obligations

Families have unique financial planning needs. Whether planning for college, supporting aging parents, or maintaining your financial needs, there are several considerations to make before the new year. 

Do You Need to Pay for College?

85% of college students relied on financial help from their families. The college price tag is an average of $35,551/ year, so students continue to depend on families for aid. 

If you have children or grandchildren, how much do you want to save for future education expenses? What can you give without harming your retirement security? How can you help them make up the difference with scholarships, grants, loans, and smart college decisions? 

Starting the saving process ahead of time will help your money grow in the long run and provide tax benefits along the way (like saving in a 529 Plan). 

Here are some other great tips we have for college saving:  

Do You Need More Life Insurance?

When was the last time you reviewed your life insurance coverage? Never? Don’t panic; now is an excellent opportunity to see the type of coverage you have and make a plan to fill any gaps. 

Your life insurance needs may have changed drastically since you opened your policy—children, new house, job, etc. Since life insurance offers financial protection for your family, you want to ensure it meets your current needs. 

Do you have enough life insurance? Here’s how to tell: 6 Questions to Help Determine If You Have Enough Life Insurance

Do You Need Long-Term Care Insurance?

If you’re caring for aging parents or on the brink of retirement yourself, you might be thinking about long-term care. 

Long-term care involves personal care services like dressing, eating, washing, etc., which can be quite costly. One option to mitigate the bill is purchasing a long-term care insurance policy. This coverage shelters you from some costs associated with long-term care, though policies tend to be quite expensive. 

We can help you review your assets and determine if this is a route you or a family member should consider exploring. 

The Year Ahead

With 2022 coming to a close, take some time to reflect on the year by asking:

  • What are you most proud of?
  • What challenges did you or a family member encounter this year, and how are you/they overcoming them?
  • Are there any new goals you’d like to add?
  • What about adjusting any current goals or priorities? 

Your financial advisor can help ensure your money remains aligned with your goals, values, and priorities as your life changes. 

Chladek Wealth Management is ready to review your year-end checklist and offer recommendations to help you take control of your future. 

Do you have any questions or concerns about your 2022 finances? Don’t hesitate to reach out to us!

Disclaimer:

The contents of this article are for general information and educational purposes and should not be construed as specific investment, financial planning, tax, accounting, or legal advice. Please consult with a professional advisor before taking any action based on the contents of this article. 

 

All investment and financial planning strategies involve risk of loss that you should be prepared to bear. We cannot guarantee any investment performance whatsoever, and past performance is not indicative of potential future returns.