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Year-end financial checklist: 9 personal finance tips for 2022

As 2021 comes to a close, you and your family reflect on where you’ve been and where you’d like to go.

As the year wraps up, it’s natural to think about your goals — professionally, personally, and financially. It’s something that you and your household will want to assess and talk about openly and honestly.

Financially speaking, perhaps you built up your emergency fund or finally paid off that credit card bill that’s been haunting you since your college years. If so, congratulations. Or perhaps you went off course a little when you did a little too much online shopping. If so, you’re not alone.

Whatever the case, you’re ready to head into the new year with some new financial goals. However, before you flip the calendar to a new year, there are some things to check off your to-do list before saying goodbye to this year.

Doing so will help ease your mind and allow you to focus on the year ahead.

Review or update your beneficiary designations

Make any needed updates to the beneficiary portion of your bank accounts, retirement accounts, life insurance policies, and annuities. 

Have you gotten married or had a child within the last 12 months? Or perhaps a loved one has exited your life through a divorce or a death. Choosing a beneficiary for your life insurance policy is a decision you should consider carefully. This is important because beneficiaries trump who’s named in a will.

To help you keep track of your beneficiaries, write down their names along with the date when any updates were made. Also, be sure to name a contingent beneficiary in case your primary beneficiary passes away. Store this document in an easy-to-access spot and review it annually.1

Don’t forget to name a beneficiary on your IRA 401(k), IRA, Roth IRA, life insurance, annuity, and other retirement accounts so that it doesn’t have to go through probate via your estate, which is costly and time-consuming. Also, if the beneficiary has a common name, it’s a good idea to include the person’s birthdate and social security number, along with their relationship to you. Afterall, you don’t want an unintended beneficiary getting your money.2

Being well organized is another way to be sure that your beneficiaries get what’s coming to them. Keep your life insurance records in at least two places — preferably inside and outside the home — in case there’s a fire or flood. And they should have a lot of details (we’re talking dates, policy numbers, the amount of the death benefit, the name of the agent who sold you the policy, etc.). A good place to store your records inside the home is with your financial records or legal papers. A safe deposit box, a trusted relative, or a professional should keep the second set of records. And be sure your beneficiaries know where to look for them after you’re gone.3

Review tax withholdings

Review your tax withholdings and payments. Big events in the last year — such as marriage, divorce, or having a child — are good reasons to adjust your withholding.

Keep in mind that American society experienced a lot of big events in the last couple years that might affect how much you should withhold. Did you qualify for coronavirus tax relief or a special tax law provision in light of a major disaster in your area? Or did you receive unemployment compensation or experience a job loss? Have you pivoted from being an employee to working in the gig economy due to the pandemic?4

Check out the Tax Withholding Estimator (also available in Spanish) from the IRS. It’s a handy tool for everyone — employees, retirees, and the self-employed — who wants to effectively tailor how much income tax to withhold.

Speaking of taxes, start prepping for tax returns by making sure your financial institutions and employers have your correct address. And then start gathering the documents you’ll need to file your taxes (prior returns, receipts, bank and credit card statements) and create a spot for them and W-2, 1099, 1099-G (for unemployment) or 1098-E (for student loans) documents.5

Review your insurance needs

Health insurance, life insurance, homeowners insurance and auto insurance — oh my!

The types of insurance you can have seem endless. It’s important to reevaluate your insurance policies regularly — to make sure you’re properly insured and are not paying too much for them.

Reviewing homeowners insurance

Homeowners insurance rates can fluctuate due to crime and bad weather near your home, which can have a negative impact on rates. Insurance premiums will be affected by the 18 weather/climate disaster events in 2021 in the United States that each exceeded $1 billion in damages.6

Thankfully, there are things you can do to help decrease the cost of your premium. For example, according to Consumer Reports, increasing your deductible from $500 to $1,000 may help you save 25 percent in premium costs. Want to save even more? Increasing your deductible to $2,500 will save you 30 percent or more.7

Looking for other practical ways to lower your premium? Bundle your homeowners and auto coverage, which could save you up to 30 percent total. In addition, there are home improvements you can make to help decrease your premium. In some states, if you replace your roof with an impact-resistant one and remove dry brush around your property (if it’s in a fire-prone area), you could earn you up to 35 percent and 5 percent in discounts, respectively.7

Also, have you accumulated more possessions since the time you purchased your policy? If so, reevaluate your homeowners policy to be sure it covers everything of value.

Reviewing auto insurance

Every state has minimum car insurance requirements — and you might need just the minimum coverage. However, make sure your coverage equals your total assets (your house, car, savings and investments) in case the costs related to the accident exceed your coverage limits — and your assets are seized to pay for them.

Your auto insurance might include liability coverage, bodily injury liability (BIL), property damage liability, personal injury protection, uninsured/underinsured motorist coverage, collision, and comprehensive.

Review the types of coverage your state requires and read up on potential rates and discounts or work with a professional to get an affordable rate.

When determining how much you should pay for your premium, car insurance companies factor in your age, driving record, the type of vehicle you drive, credit score, and where you live. However, that doesn’t mean you can’t do things to help lower your car insurance costs.

One way is to raise your deductible.

Here are a few more tips:

Let’s say your family car is paid off but you still have full coverage from when it was new. Now that it’s several years old, you might not need full coverage. Review how much you need and get quotes from three different companies.8

Find out if you can be rewarded with a discount for your good driving record or your car’s antitheft devices and safety features. Or for driving fewer miles each year. In fact, a number of people with office jobs started working from home due to the pandemic and continue to do so — see if you can use that to your advantage.8

Sign up for driver-monitored savings or take a certified defensive driving course.8

Consider using the same insurance company for your homeowners and auto coverage. Bundling your insurance may provide you 30 percent in savings.7

Review your portfolio — diversify if need be

Take a close look at your investments.

We saw how quickly the world changed when the pandemic began. So, too, can your life situation. Make sure your financial plan still fits you. Did you just inherit some money? Or perhaps your job is less secure than it was last year. As your life changes, your investments and financial portfolio might need another review and alterations.

Meet with your financial professional to see how changes in your life may have impacted your overall financial portfolio.

For instance, stocks and bonds in your investment portfolio should be appropriate for your age and how well you tolerate risk.

Your portfolio should reflect investment objectives that are appropriate for your current life stage. Your age, risk tolerance, tax status and time horizon, among other factors, are all important. Speak with a financial professional regarding your personal situation.

Spend eligible flex dollars

A healthcare flexible spending account (FSA) can save you money — as long as you spend the pre-tax dollars before the end of the year. Otherwise you run the risk of losing it (unless your employer offers a 2.5-month grace period or allows you to carry over $550 into the next year).9

In 2021, employees could squirrel away as much as $2,750. (Unless your employer limited the contribution to less than that amount.)10 So, make that last-minute dental or acupuncture appointment while there’s still time.

A tip for next year’s open enrollment period: If you, your spouse or your child is going to need medical services, you should consider contributing to your FSA at least the amount of your health insurance deductible.

Check in on your emergency savings account

In an ideal world, you’d have three to six months’ worth of emergency savings set aside.

However, we know it can be hard to live in an ideal world during a pandemic, which is making it more difficult for some heads of households to care for their family’s everyday needs. However, it’s important that you don’t fall into the camp of the 25 percent of Americans who don’t have any emergency savings.11 And just 1 in 4 Americans have the cash for a $1,000 emergency expense.12

Remember that an unexpected emergency, such as a car repair or a medical expense, could set you back financially. To help ensure that doesn’t happen, build up your savings by automatically depositing some money from your paycheck to a dedicated savings account.

If you have kids, contribute to their college fund

College tuition isn’t for the faint of heart. But having a tax-advantaged strategy in place can help you prepare for the rising costs. If you already have one, try to contribute as much as you can.

As you’re preparing your child (or children) for his or her upcoming education, whether it’s elementary, high school or college, there are many different types of vehicles that could help you reach your goals. Speak to a financial professional to explore the possibilities and to see what would be a good fit for your specific situation. 

Make charitable donations

Not surprisingly, charitable giving was off to a slow start in 2020 — down 6 percent during the year’s first quarter.13 However, charitable giving made a comeback, reaching a record $471.44 billion by the end of 2020. This was an increase of 5.1 percent over the $448.66 billion contributed to charitable organizations in 2019.14

Think about it: You could help make it be another record year in charitable donations in 2021. Donate to an organization that’s close to your heart. The benefits are two-fold: You will reduce your taxable income and feel good about giving some of your hard-earned dollars to a good cause. It’s a win-win.

Bonus: The Taxpayer Certainty and Disaster Tax Relief Act of 2020 provides provisions to encourage charitable giving.15

Start planning for the future — and future memories

The new year starts as quickly as the last one ends. So be sure to set some new goals and write them down. Do you want to create an estate plan or simply save some money for your teen’s braces? Or you might be expecting some big changes that will affect your finances — such as having a baby or changing your career. Create goals surrounding these anticipated changes.5

If it’s realistic, your financial checklist should include a savings plan for a family vacation or another memorable event. It’s nice to have something to look forward to, even if that something will occur sometime way in the future. It’ll keep your eye on the prize.

You can open a dedicated savings account and set up an automatic transfer of funds to get you closer to your destination. And don’t minimize how effective dropping your loose change into a change jar can be.

You’re now on your way to moving forward with your future. 

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1. Anspach, Dana. “Why Beneficiary Designations Override Your Will,” thebalance.com, Updated June 15, 2020.

2. Rae, David. “5 Mistakes to Avoid With Retirement Account Beneficiary Selections,” Forbes.com, October 25, 2020.

3. How Should I Organize and Store My Life Insurance Records?” Insurance Information Institute, January, 2021.

4. “Give tax withholding a fresh look as 2021 year-end nears,” IRS.gov, October 8, 2021.

5. Blacklock, Amy; Cook, Vicki. “Year-end financial review and planning checklist,” Women Who Money, Updated August 23, 2021.

6. “U.S. Billion-Dollar Weather and Climate Disasters,” NOAA National Centers for Environmental Information (NCEI) (2021).

7. “Homeowners Insurance Buying Guide,” consumerreports.org, Updated June 11, 2021.

8. Warren, Karon. “How to reduce your car insurance costs,” moneygeek.com, Updated September 20, 2021.

9. O’Brien, Sarah. “Rules for flexible spending accounts are more generous this year, if your employer opted in. Here’s what to know,” cnbc.com, October 6, 2021.

10. Washington, Kemberley. “What is a flexible spending account (FSA)? Forbes.com, July 16, 2021.

11. Velasquez, Francisco. “Over half of Americans have less than 3 months’ worth of emergency savings,” cnbc.com, July 28, 2021.

12. Konish, Lorie. “Just 39% of Americans could pay for a $1,000 emergency expense,” cnbc.com, January 11, 2021

13. “Charitable giving down 6 percent in first quarter of 2020,” Philanthropy News Digest, June 24, 2020.

14. Lilly Family School of Philanthropy. “Giving USA 2021: In a year of unprecedented events and challenges, charitable giving reached a record $471.44 billion in 2020,” philanthropynetwork.org, June 15, 2021.

15. “Expanded tax benefits help individuals and businesses give to charity during 2021; deductions up to $600 available for cash donations by non-itemizers” irs.gov, September 17, 2021.


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