Year End Financial Tasks

A lot of readers will probably have set New Year’s resolutions related to their finances, but it seems that taxes occupy a lot of the time allocated to these responsibilities during the first part of the year. After you’ve gotten through tax season, you’re not necessarily thinking about some of those goals you committed to earlier.  We’re providing a calendar with a schedule for getting some of this done throughout the year.

Quarter 1 – First, taxes

This can be time consuming and require a lot of energy, so we set aside the first period as a time to get this done, but really focus on no other financial tasks

Quarter 2 – Account & Balance sheet Review

If you don’t have a professional investment manager, you can choose this time to review family investment accounts for their allocations, their holdings, and their performance. If there are changes to be made, such as selling a security or rebalancing assets in a retirement plan, keep a short list of those for later execution. This task does not have to be very extensive, but it is important to review your accounts at least one time per year. Use this time as an opportunity to do so.

   Statement of Net Worth

Every year, I review our family balance sheet in an effort to understand our assets and how they have grown (hopefully). There are some items where I use estimates, such as the value of our home, while others are pulled from various statements. I keep a spreadsheet from year-to-year for comparison.

Also, our level of emergency funds is reviewed at this time, especially relative to the potential needs for funds in the coming 12 months. Finally, this review provides the opportunity to review the debt we owe (and its terms) to ensure we do not have excessive risk and that we do have favorable rates.

Quarter 3 – Estate planning and credit

This item can be summarized by the following question: “Have there been any life changes in the last year that would necessitate a change to our wills or to our insurance contracts?” If the answer is yes, then also address the beneficiary information on any retirement account you have as well.

   Credit Review and Credit Score

During this time, we also recommend our clients review their credit reports (at least annually) so they are aware of any potential fraud occurring within their accounts. We believe it is important for you to know your credit scores so you can be informed buyers of credit.

Quarter 4 – Record-keeping

Year-end is a great time to do this housekeeping as well. To learn about what paperwork is important to keep and what you can purge, please <review this document>.

This is also the time of year when it is best to visit with your accountant to let them know what they can expect for the current tax year; if there are additional tax deposits to make due to income variability, this is a good time to do so.

That’s it… a few easy steps to better financial health, which are separated into manageable tasks throughout the year. These enhance your financial position rather than depleting it.  If, during the course of your work, you decide you need some assistance or a second opinion on your investments or other financial decisions, we encourage you to contact us at Cornerstone.

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