Updated: December 3, 2023
The new year is just around the corner, and we’re now reaching the peak of the holiday celebrations.
Most of us will be busy attending Christmas parties, school reunions, and yuletide events – but I hope you can also find time to do a personal financial check-up.
It’s a good time to take stock of what you’ve achieved financially this year. To analyze and learn from your money mistakes, note and celebrate the good decisions, and plan how you can do better next year.
Below are nine important tasks that will help set your finances in the right direction before this year ends.
1. Make a financial inventory.
List down your assets and their values, know exactly how much your liabilities are, and recalculate your net worth. My hope is that it’s higher than last year. If not, then plan on how to increase your assets and how to lessen or eliminate your liabilities starting next year.
2. Calculate your annual spending.
Check if you spent less than what you earned. Note your biggest expenses. Assess the efficiencies of your income sources. Evaluate your spending discipline and adjust your budget accordingly. Think of ways you can earn more next year.
3. Update your emergency fund.
Calculate your average monthly spending for the past year and check if your emergency fund is worth at least six months of that value. Inflation and lifestyle changes can cause your monthly expenses, and consequently, your emergency fund requirements, to increase.
4. Review your insurance policies.
Calculate if you’re still adequately insured. Call your financial advisor for help in evaluating your requirements; and while you’re at it, ask to be updated about the terms of your policy, and update them about your beneficiaries.
5. Schedule your physical exam.
If you haven’t already done so, set a doctor’s appointment for your annual health check-up. Even if you were as healthy as an ox for the past year, there’s no substitute for factual numbers that can confirm your clean bill of health.
6. Check and rebalance your investment portfolio.
Review your financial goals and check if your investments are growing accordingly to meet your targets. It may be necessary to move some of your money towards less risky investments for goals that are coming within the next 2 years.
7. Organize your financial documents.
Inspect your financial documents and make sure they’re still complete and in good condition. Keep them in a safe and secure place. Meanwhile, you can now purge the less important ones like utility bills and bank statements, which are older than 2 years. If possible, digitize some of the documents as a backup copy.
8. Clean up and secure your online accounts.
Protect yourself from identity theft and hacking by changing your online passwords. You should also clean up your email and social media accounts by canceling subscriptions you don’t read, deleting apps and plugins you don’t use, removing inactive contacts, and reviewing your privacy settings.
9. Set goals for next year.
Decide what you want to achieve next year and plan for it. Define at least one major goal, and come up with a list of things you’ll do to attain it. Be as concrete as you can with your list, and set a date to increase your chances of reaching that goal before next year ends.