10 Year End Money Management Reminders

It’s the end of the year already and along with the planning and preparation of family reunions, parties and other forms of merriment, there are some other things to check off your list as well: the annual financial checkup. I like to treat our household like a mini-company that needs a financial once-over by year’s end to make sure we’re still on track towards our goals. There are quite a few things that could use a good review by now, and I’m going to have to dust off my records and go through the exercise myself. I found that you could actually lose out on more than a few bucks if some of these tasks fall through the cracks, so I do try to perform as much of these as I can.

 
Here are the personal money management tasks I go over by year end, some of which have also been mentioned in CNN Money:

1. Review our credit card report and checking account expense report for the year and see where all the money went.
   Here’s a good place to start checking how our spending patterns were during the past year. Based on our spending, I am able to work out a new budget for the coming year to better control our expenses.
2. Review our annual account statements that are usually provided by financial institutions.
   This is a great way to evaluate my investments and to make sure everything is going along as expected. It’s a way to see whether we’re on track towards our investment goals.
3. Evaluate our financial strategies such as debt reduction, investment plans, insurance policies and budgets.
   The holiday break serves as a great time to get the big picture on our finances. As a family, we bounce around financial strategies and decisions for the near term. For example, if we have a little cash on hand, should we pay down the mortgage a little more? Invest in some real estate as this market softens further? Look into alternative investments? We will list down all the options, prioritize them and then act!
4. Review and balance our portfolio.
   Oh my. Our portfolio is admittedly in a bit of a mess right now. So this is one of those tasks I need to make sure I do soon, as I have been remiss in my investment monitoring duties: I’ll be talking about this once I’m able to refine our allocation.
5. Give away gifts to my children or other people within the gift tax limit.
   The best way to lighten your estate (and thereby adjust your estate taxes down the road) is to give away part of it. And the favorable way to do this in order to avoid incurring gift taxes is to give within the tax limits on a regular schedule (for 2006, it is $12,000 per grantor, so parents of a child can each give $12,000 each for a total of $24,000 per child). Time to give away some last chance bequests for the year.
6. Check into our IRA accounts.
   If you can afford to max out your contributions to IRA accounts, and you haven’t yet contributed nor met the maximum, then this is your chance to catch up. I’m finding a moment to ensure that our IRAs are properly funded within our capabilities this year. Another wise move would be to check next year’s limits to see if there are new maximums, then readjust savings accordingly. The same holds true for withdrawing from your IRA — there are guidelines stating how to withdraw your money for best tax treatment.
7. Ensure that the flexible spending plan we funded was well worth the time and trouble.
   It’s time to make sure we’ve kept up with our flexible spending plans. We should use them up now or lose them! Then we’ll need to make the necessary insurance claims if we have to.
8. Take our losses like an adult.
   For next year’s tax returns, we’d like to show some losses to balance our gains, so if it makes sense to ditch some of our losers, we’ll be selling them now.
9. Give to charity.
   It’s the time to give, and I’ve been receiving the customary donation envelopes from various causes. If you haven’t done so already, consider some contributions to your favorite charities — these are tax deductible for the year.
10. Prepare for any end of year windfalls.
    Whether it be cash gifts, annual bonuses and such, prepare for any windfalls you are expecting to receive by thinking about where you’re going to apply them. Actually, I probably don’t have any coming my way (but I can certainly be pleasantly surprised!), but if you do, then plan on where to appropriate your chunk o’ dough now, before you are tempted to kiss it goodbye.

For more thoughts on this subject, you can check out the following resources:

CNN Money’s 8 Smart Money Moves
Free Money Finance’s The Year-End Personal Finance Moves You Should Make
Central Valley Real Estate’s 8 Real Estate Moves Before Year End To Save Taxes
Bean Counter Blog’s 8 Year End Tax Moves You Can’t Afford To Miss

 
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