Year-End Finance Tips: How to Tie Up Loose Ends Before the New YearTuesday, December 01, 2020
The end of the year is a busy time for many of us – and this year may be especially hectic with the added stress the COVID-19 pandemic may have caused. Between the holiday season, wrapping up your budget for the year and preparing for the New Year ahead, it’s easy to feel overwhelmed about your finances. Your finances may also have changed or been affected by the pandemic.
Making time to review your current financial situation can help as you transition into the New Year. Here are a few of our go-to financial tips to help you wrap things up for the year ahead.
DOUBLE CHECK YOUR BILLS
Schedules tend to fill up quickly at the end of the year, with holiday festivities and family gatherings taking place. It can be easy to overlook a bill and miss a payment, but doing so could hurt your credit score. Make sure all of your bills are in order before the New Year. Remember to consider both your monthly bills — like utility, rent or mortgage payments — as well as less frequent expenses like annual payments, that may be due at the end of the year or the beginning of the next.
For example, if you have a child attending college and you pay for tuition, you may need to pay the tuition bill at the end of this year for the upcoming semester. Missing the payment could cause delays in your child’s enrollment.
One way to avoid missed payments is by setting up automatic payments for your expenses using bill pay services. This allows you to schedule payments from your accounts for one-time or recurring expenses. An added bonus to using Bill Pay with ASB is that for every customer who signs up for Bill Pay, now through December 31, 2020, a dollar will be donated to Good360, a national 501(c)(3) nonprofit whose mission is to transform lives by providing hope, dignity, and a sense of renewed possibility to individuals, families, and communities impacted by disasters or other challenging life circumstances. As the global leader in product philanthropy and purposeful giving, Good360 partners with socially responsible companies to source highly needed goods and distribute them through a network of diverse nonprofits that support people in need.
REVISIT SUBSCRIPTIONS AND MEMBERSHIPS
Have you ever signed up for a subscription service, like a magazine or a product trial, and forgot about it after a few months? You may still be paying for subscriptions you’re not using. You could potentially save a lot of money by reviewing your subscriptions and memberships before they renew for the New Year.
Consider making a list of your current subscriptions and memberships and ranking them in order of importance or usage. Go through the list and see if there are any services you don’t use as often as you thought. You can then choose which ones to keep, and which subscriptions should be canceled.
REVIEW INSURANCE POLICIES
The end of the year is the perfect time to review your insurance policies. Your insurance needs may have changed over the year. Reviewing your policies can help ensure you’ve got the coverage you need for your current financial situation. It’s also a great way to lower your monthly expenses by exploring potential discounts or coverage changes.
Don’t forget to go over your life insurance policy when looking at other insurance options. If you don’t have life insurance, the New Year is a great time to purchase one. If you have a policy, check it to make sure it still provides enough protection for your family.
If you’ve had a significant life change this year — like a new baby, marriage, or divorce — it’s also a good idea to revisit your estate planning documents. Update beneficiaries on retirement accounts and insurance policies. Review any wills, trusts, or powers of attorney to make sure these documents are up to date with your current family situation.
GET ORGANIZED FOR TAX SEASON
It may be the end of the year, but tax season is just a few months away. Save yourself some of the stress of tax season by getting organized now. Create a file for all of your deductible receipts, previous tax returns, and tax documents. Having an organized file will make it easier to sort new tax documents as they come in during the first months of the year.
CONTRIBUTE TO RETIREMENT ACCOUNTS
Planning for your future retirement is a big part of being financially healthy. Use the end of the year to fund retirement accounts that haven’t yet been maxed out. Several types of retirement accounts, such as IRAs, can technically be funded up until you file taxes next year. However, if you have the funds to contribute now, you can save yourself the extra hassle during tax time.
Be sure to talk with a tax advisor about any potential tax savings from retirement contributions. Depending on your financial situation, you might be able to deduct certain contributions to retirement accounts. Speak with a financial consultant and your tax advisor if you have questions, or for more information on how to prepare for retirement.
USE UP YOUR FLEXIBLE SPENDING ACCOUNT (FSA)
Do you have a flexible spending account for healthcare? Flexible spending accounts, or FSAs, are tax-advantaged accounts that allow you to pay for medical expenses during the year. The drawback of an FSA is that money must be used by the end of the year — it doesn’t roll over into the next. That means if you don’t use up all of the funds in the account, you lose them.
If you have an FSA, be sure to use the money in the account before the end of the year. You can use the funds for many different medical expenses, including prescriptions, medical supplies, dental services, and health insurance deductibles for yourself, your spouse, and your dependents.
REVIEW YOUR BUDGET AND GOALS
Did you stick to your budget this year? Were you able to meet your financial goals? These questions help you measure the success of your budget and financial goals for the past year. A lot can change over a year, so it’s possible that your budget changed over time. The end of the year is the perfect time to look back at your budget and decide what worked, what didn’t, and where you could improve.
It’s also a good time to check on any financial goals you made at the beginning of the year, such as a savings goal. If you met your goals, consider how easy or difficult it was to reach your desired goal. If you didn’t meet your goals, look at the reasons why.
Remember that it’s okay if you didn’t stick exactly to your budget or came short of your financial goals. These measurements should be helpful guidelines, not strict rules. Lots of factors can lead to unexpected changes that make it difficult to stay on budget. This year, for example, many individuals felt the financial effects of the ongoing COVID-19 pandemic. A sudden loss of income or a lifestyle change due to the pandemic could easily have hurt your budget or goals.
SET A NEW BUDGET AND GOALS
Now that you know what worked and what didn’t this year, you can look to the year ahead. Start creating your budget and setting your financial goals. This way, you’ll be ready to jump in right at the beginning of the year. Try to review your new budget every month or quarter to make sure you’re still on track over the year.
There’s a lot to do at the end of one year and the beginning of the next, but it’s a good idea to dedicate some time to your financial health. By following these tips, you should be able to tie up loose ends so you’re ready to take on the New Year. Get started today by reviewing your financial situation and checking out our Resource Center.