Top 4 Financial Tasks You Should Take Care of at The End of The Year

By: Cecille Nguyen, MBA

Senior Wealth Strategist at Navigator Advisers

It is the most wonderful time of the year.  It is also the time of year that we all struggle with adulting gracefully.  A big part of adulting is making sure our financial life is in order.  Here are four financial tasks you should take care of at the end of the year.

1.  Make sure your beneficiaries are updated across the board.

Generally, by the end of the year, a lot of life has happened to each of us.  Anything from buying a house to getting married (or divorced) to having/adopting a new child to changing jobs – all of which comes with a whole new set of people and assets we need to take care of.  Because many of us get caught up in these life events, we usually forget to update our beneficiaries.  Here is a quick list of where we need to make sure our beneficiaries are updated:

1. Bank Accounts
2. Insurances
3. Investment Accounts
4. Retirement Accounts
5. Pensions
6. Wills and Trusts (sit down with your Estate Planning Attorney for this one)

Once you are underway updating your beneficiaries, do not forget to update your Emergency Contacts!  Reach out to your Human Resources representative, your attorney, your Financial Adviser, and your neighbor to let them know who they need to reach out to in case something was to happen to you.

2.  Review Your Insurance Coverages.

Most of us take for granted that once we purchase insurance protection coverage – we are all set.  That is not always the case.  We get married or have/adopt a new child – our health care needs to cover more.  We get a promotion or raise – our life insurance and disability insurance coverages need to reflect the increase in our economic value.  For similar reasons in which we need to update our beneficiaries, we also need to update our insurance coverages:  life happens.  It is a good idea to reach out to your Financial Adviser to do a review of your coverages (IMO: every FA should offer this as a complimentary service to their clients).  Here is a quick list of insurances we need to review and update if necessary:

1. Healthcare
2. Life Insurance
3. Short-term & Long-term Disability Insurance
4. Long Term Care Insurance
5. Home & Auto Insurance (Including Renters)

3.  Gather your tax documents.

Even though most of us consider tax season to start at the beginning of the year, it does not hurt to make sure we have our ducks in a row before April 15^th. 

For self-employed individuals, this would include making sure your books are caught up and balanced.  Now is the time to sit down with your bookkeeper and get those receipts and expenses reconciled and your income profit and draws recorded.  The less of a crunch for you and your bookkeeper must prepare your financial statements for your CPA, the better.

For W2 individuals, preparing your filing may seem less of a headache.  However, if you have changed jobs in the middle of the year, if you took an early distribution from your retirement account, if you had a windfall of an inheritance, or if you did well in the stock market and cash out some of your shares, your taxes may be more complicated than other years.  Firstly, you want to make a list of the employers you worked for in this year.  Once your W2’s start to arrive, you can check them off one by one (no more surprise W2’s after you filed).  Secondly, note any inheritance you received this past year as well as any gains (and losses) you made from trading in the stock market accounts.  Thirdly, sit down with your CPA and discuss a strategy to mitigate your tax bill to the IRS.

Whether you are self-employed or a W2 employee, these are the tax documents you will need to gather to make your filing less of a hassle come the new year:

1. Donations or Charitable Giving Receipts
2. HSA expenditure receipts or FSA reimbursement statements
3. SALT (State and Local Taxes) deduction receipts (including sales tax)
4. Receipts for expenses related to Job Hunting

4.  Plan for Next Year’s Savings Allocations.

Every year, saving more/spending less makes the list of top five New Year’s Resolutions for Americans.  All good resolutions start out with a plan, so why not plan early?  Besides, how are you going to accomplish your goal if you do not create a step-by-step guide for yourself.  Here is where meeting with your Financial Adviser will come in handy.  Your FA will be able to work with you to create a comfortable savings strategy around the following areas and more:

1. Retirement Account Savings (401(k), IRAs, etc.)
2. Health Savings Accounts or Flexible Savings Accounts
3. Big Ticket Purchases (new car, house, moving expenses, college tuition, etc.)
4. Wedding or New Child or Pet
5. Away-cation (because after 2020 – we all need one)

If you have not already, reach out to a professional to help you accomplish these items.  An Estate Planning Attorney is great for updating your beneficiaries and creating a will or trust for you.  A CPA is best for answering your tax related questions and telling you what documentation you need once tax filing season comes around.  And a Financial Adviser is the one who can guide you to your financial goals.  Once you can check these four financial tasks off your to-do list, you will be able to move full steam ahead into the new year well-prepared and organized.

Cecille Nguyen is Senior Wealth Strategist at Navigator Advisers.  As an independent adviser, Cecille works with her clients to implement customized, comprehensive financial plans by using tax-efficient strategies and balancing investments with risk management.  You can reach Cecille at 206-778-1121 or cecille@navadvisers.com.