Prepare for the New Year With This 10-Step Year-End Financial Checklist

Quick Answer

There are several steps you can take to prepare for financial success in the coming year, including checking your credit, reviewing your budget, assessing your savings and debt progress and more.

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As the end of the year approaches, it's a good idea to evaluate your financial situation to determine how well you've progressed toward your goals and whether you need to make adjustments for the new year.

Here are 10 steps you can take to assess your financial plan and prepare for 2023.

1. Organize Your Finances

Start by gathering information about all of your financial accounts so you can get a good idea of where you stand. This step can be easy if you have budgeting software or another system for keeping your financial plan organized throughout the year.

Otherwise, gather information about your bank account and credit card accounts, your savings and investment account balances, loan balances, insurance coverages and every other aspect of your financial plan to better understand how you've spent, saved and invested over the year.

2. Check Your Credit

Review your credit score and also get copies of your credit report from all three consumer credit bureaus (Experian, TransUnion and Equifax). If your credit score needs help, use the information on your credit reports to determine how you can improve it.

Options may include:

  • Paying all your bills on time.
  • Paying down credit card balances to keep your credit utilization rate under 30%.
  • Avoiding opening new credit accounts unless necessary.
  • Keeping existing credit accounts open, even if you don't use them.
  • Signing up for Experian Boost®ø, a free feature that can help increase your credit score by giving you credit for on-time utility, cellphone, rent and streaming service payments.
  • Disputing inaccurate credit information.

If you're new to credit, you can also use Experian Go™, a free service that provides resources to help you build your credit history.

3. Review Your Budget

Go over this past year's budget to see how you've spent your money. If you use a budgeting app, you'll be able to break down your spending by category to get a better idea of how well you did with your spending plan. Some credit card issuers also offer this feature.

If your current budgeting methods and tools aren't working, look for a better way to track your spending, and if you don't have a budget, take time to make one. Assess your income and expenses, look for places to save money and revise your budget to reflect any changes to your income or expenses in the new year.

4. Plan for Upcoming Expenses

If you expect to have one or more large expenses in the coming year, create a plan to save up so your budget won't take a major hit. This may include moving costs, medical procedures, a vacation or other large expenses that you know about and can plan for.

5. Assess Your Savings

Start by evaluating your emergency fund. Financial experts recommend maintaining a large enough safety net to cover three to six months' worth of expenses, but base your evaluation on your needs and preferences.

If you haven't reached your goal for emergency savings, evaluate and adjust your plan to continue building up this important safety net. If you don't have an emergency fund, start one.

Also, review other savings goals, such as a home down payment fund and a vacation fund. Look at what you've done in the past year and determine whether you need to make adjustments. And if you haven't already, consider setting up automated transfers to one or more savings accounts to help build your emergency fund and other savings.

6. Pay Down Debt

Review your debt situation by listing out each credit account, along with its balance, interest rate, monthly payment and time left on its repayment term.

If you already have a plan in place to pay down your debt quickly, assess it to see if you're still on track to accomplish your goal. If not, consider creating a plan to tackle your debt. Options may include:

If you're struggling to keep up with your debt payments, consider contacting a credit counseling agency to get some expert advice and possibly even get on a debt management plan.

7. Prepare for Tax Time

Start by gathering the documents you need to file your taxes, including last year's tax returns, receipts for applicable charitable contributions, business expenses, medical costs and child care expenses, educational expenses and other tax-deductible transactions.

Also, watch out for tax forms from your employer, bank or credit union and other applicable entities over the first couple of months of the year.

Before December 31, make any last-minute moves to minimize your tax bill, such as:

  • Making charitable contributions or retirement contributions.
  • Using up your flexible spending account. Employer deadlines for this may vary.
  • Maxing out your health savings account if you have a high-deductible health plan.
  • Making last-minute business purchases that qualify as deductions.

Also, decide whether you'll use a tax preparation service or a professional tax preparer. If you expect a refund, decide how to use the money, and if you expect to owe money, make a plan to set aside enough money to pay the bill.

8. Examine Your Insurance Coverage

Gather details about each of your insurance policies to evaluate whether you have enough coverage for your needs. You may also consider adding new coverages to get additional protection for your financial plan and your loved ones.

Make sure your life insurance policies list the correct beneficiaries and look for ways to reduce insurance premiums, such as dropping unnecessary coverage or increasing deductibles.

9. Review Your Retirement Accounts and Other Investments

Experts generally recommend saving 15% of your gross income toward retirement, so review your savings rate to determine whether you need to make adjustments. If you have a 401(k) plan and your employer offers a matching contribution, make sure you're getting the maximum match amount.

Instead of maxing out your 401(k) contributions, though, consider opening a traditional IRA or Roth IRA to have an account where you have more control over how your money is invested.

Next, review your results over the past year from all of your investment accounts and rebalance your portfolio if needed. Finally, make sure all your investment and retirement accounts list the correct beneficiaries.

10. Make or Update Your Estate Plan

An estate plan may include a will, a living trust, a living will, a health care or financial power of attorney and a plan for your funeral arrangements. Make sure your estate plan lists the correct beneficiaries and that your documents are in a safe place. If you've had major life changes since creating your plan, update it accordingly.

If you don't have an estate plan, create one. If your estate planning needs are minimal, you may be able to create your own documents at Nolo, LegalZoom, RocketLawyer or other self-help legal sites. But if you have a complex family situation or lots of assets, consult an estate planning attorney.