The end of the year is the time when everyone is looking to their finances and seeing how the year went. The fourth quarter is beginning to come to a close so why not assess the progress or damages made to your finances? Checking in with your investments, savings, and also saying hello to your financial advisor around this time is not a bad idea. When looking at your finances at the end of the year, here are a few tips to follow.
1 – Assess
Over anything, it is important to assess how you did from the previous year and take into consideration all of the unexpected surprises that happened this year. A strong understanding of your savings and investments will only allow you to become more aware of where you need to cut back on spending. Any goals you did not reach this year should be pushed over to the next.
2 – Constant tracking and Changes
In regards to your investments, for example, it makes sense to assess your allocation. The tax reform may very well extend the stock rally for the companies that are to gain mega tax savings from the new reform. The key to risk management is assessing and rebalancing accordingly.
3 – Cash Flow
How did your income look this year and did you face any major expenses? A general assessment of your income vs expenses is dire when reviewing at the end of the year. A great understanding of what you spend and how much on a monthly or quarterly basis will be key in finding avenues to cut expenditures. You can label these as “painless savings”. They are an expense you may not even realize rack up on a monthly basis. What makes them painless is that they are easy ways to cut out unnecessary expenses.
4 – Maximize Retirement
Saving for retirement is essential but being proactive and assessing if you are maximizing your savings is best practice. Your 401k and IRA contributions should be receiving the most optimized payments in context of your income. Try not to miss any valuable tax deductions and make sure you defer in each pay period to maximize any employer contributions.