The end of a year brings a lot of good things with it. The holiday season is a time for warmth, sharing, and joy. However, the end of the year also brings the need to begin your year-end financial planning. With December fast approaching, it’s time for you to start thinking about taxes, new as well as old investments, and goal-setting for 2021.
It’s normal to get a little stressed out when you think about money especially around the holidays. It’s easier not to worry and just hope that things will work out for the best, but the smartest move is to plan ahead. Following a few small financial steps at the end of the year can make your following year much easier.
Your Current Financial Status –
The first step of preparing for next year’s finances is to understand the current financial picture. This is the easiest part of the whole process because it does not involve changing anything. The only goal is to look and get a clear picture of where your money is going.
Start by opening up your main bank accounts and investment portfolios. Look at how your net worth has gone up or down over the course of the year. If you had set goals at the beginning of the year, now is a good time to compare your real results to what you’d hoped for. Did you meet your goals or fall short?
Make sure to open up any small accounts you might have forgotten about. If you have an old checking account you haven’t used in six months, take a look just to be sure nothing is wrong there. You could make a list if you have any financial accounts or cards that you want to close.
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Eliminate Wasteful Expenses –
It’s amazing how quickly we stack up our expenses. Gym memberships, TV subscriptions, meal planning subscriptions, and a host of other auto-billing services regularly dip into your bank account and take away your hard-earned money. This is fine if you have the money and enjoy the service. Just don’t let them keep charging you when you stop using whatever you are paying for.
When you haven’t watched TV in three months, cancel it. If your gym membership makes you feel guilty but you never actually go, cancel it for now. Whatever you are paying for and not using, get rid of it.
You can easily shake up an extra $100 per month just by canceling your unused services. This is a fun and easy way to start your year-end financial planning by saving some money.
Calculate Your Taxes Now –
You can start preparing your tax statements at the end of the year. It’s best not to actually do any of the final math or fill out the statements yet because things could change in the last month or two. Instead, you should just look at your income and taxes paid so far to see what you can expect on your tax return.
This will give you advance warning in the unfortunate event that you owe money come tax season. It’s better to realize you are $1,000 short on taxes in December than in March. Ideally, you won’t ever be surprised with a tax bill, but it’s better to discover it early than late.
If you are expecting a healthy tax return, it’s fun to find out about that too. You can account for that money and have a plan way ahead of time. This helps to avoid impulse spending that occurs when a lump sum of unexpected money drops into your account. Consider using your return to pay off debts or get ahead on your retirement fund. These are the simplest ways to fast-forward your path towards financial freedom.
Set Investment Goals –
Investing is one of the great joys of life. As a reward for being patient and putting your money to good use, you are able to grow your net worth until you have financial independence. Good investing rewards you and passes on that reward to future generations.
It’s good to set investment goals before the end of the year. This enables you and your family to hit the ground running. Don’t be too conservative with your goals. Think about the most ambitious version of your investment plan and aim for that.
It’s ok to fall short on a big goal. Financial planning is the best time to get ambitious because when you do well with money, you have more options in life. You can always scale back your goals later.
Get Ahead On Your Finances –
The best time to plan your financial future is ahead of time. Getting your personal finances under control is one of the most important aspects of mental health and clarity. It’s nearly impossible to be happy without a firm financial foundation. Use the tips in this article to start your year-end financial planning and set yourself up for a great year.
When the year is winding up and you’ve realized just how much you’ve spent on the holidays, it’s a good idea to get some financial planning underway. By planning and monitoring your spending throughout the year, you can get a handle on your finances and not feel guilty when yet another new year approaches. If you ever need help with financial planning, setting up a budget, or getting your debt under control, we are only a phone call or click away. Call us today at 1-866-699-2227 or visit us online at www.advantageccs.org, and we’d be happy to help!