Year-end financial checklist: 9 personal finance tips for 2019

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

And your financial health is a big part of the picture. As the calendar flips to the new year, here are some things to check off your financial wellness list before year-end.

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.1

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 a binder and review it annually.1

Don’t forget to name a beneficiary on your IRA so that it doesn’t have to pass through your estate. This could result in an unintended beneficiary getting paid or your heirs could miss out on important tax advantages.2

Review tax withholdings

Review your W-4. According to the Government Accountability Office, 30 million Americans (21 percent) aren’t withholding enough taxes in 2018. On the flip side, almost 75 percent are withholding too much of their income.

For example, if you have a spouse, the new Tax Cuts and Jobs Acts says that your tax rate is 12 percent if you make $19,050 to $77,400 per year; 22 percent for $77,400 to $165,000; and 24 percent for $165,000 to $315,000.3

Visit the IRS site to find out how much you should withhold from each paycheck.3

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. Also, have you accumulated many more possessions since the time you purchased your policy? If so, you might want to reevaluate your homeowners policy to be sure it covers everything of value.4

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. More than a dozen states require drivers to carry expensive no-fault insurance. Rates and available discounts may vary, so shop around for the best rate.5

Review your portfolio — diversify if need be

Take a close look at your investments.

Your plan should fit your current life situation, which can change in just a year. 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.6

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.

It was a volatile stock market in 2018. Take advantage of tax breaks if you can. For example, if you have the option of selling a security at a loss, a taxable loss can offset a taxable gain.7

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

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 grace period).

In 2018, employees could squirrel away as much as $2,650. So, make that last-minute dental or chiropractic appointment while there’s still time. Or stock up on qualified medical supplies such as contact lens solution and high-SPF sunscreen.

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.8

Check in on your emergency savings account

In an ideal world, you’d have three to six months’ worth of emergency savings set aside. The reality is that can be difficult when you’re caring for your family’s everyday needs. However, it’s important that you don’t fall into the camp of 55 million Americans (roughly 25 percent) who say they don’t have any emergency savings.9

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.9

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 advisor to explore the possibilities and to see what would be a good fit for your specific situation. 

Make charitable donations

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.

You can also write off donated goods to a registered charity, as long as you keep a detailed receipt that includes the current value of the giveaways.10

Start planning for next year’s memories

Your financial checklist should include a savings plan for a family vacation or another memorable event.

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. Within a year, $1.37 a day will add up to $500. It won’t pay for your trip, but it will help.11

 

This information is a general discussion of the relevant federal tax laws provided to promote ideas that may benefit a taxpayer. It is not intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax penalties. Taxpayers should seek the advice of their own advisors regarding any tax and legal issues specific to their situation.

Investments will fluctuate and when redeemed may be worth more or less than when originally invested.

Want to learn more?

Read more personal finance tips so you can do what you love and worry less about your money. 

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1. Anspach, Dana. “Why Beneficiary Designations Override Your Will,” thebalance.com, October 18, 2018.

2. “Time to Review Beneficiary Designations,” fedweek.com, January 4, 2018.

3. Mercado, Darla. “30 Million People are not Withholding Enough for Taxes. How to Tell if You’re One of Them,” cnbc.com, August 1, 2018.

4. Homeowners Insurance Buying Guide, consumerreports.org, June, 2018.

5. “How Much Car Insurance Do You Need?” guides.wsj.com

6. Huang, Nellie S. “Review Your Portfolio in 3 Easy Steps,” kiplinger.com, January 2018. 

7. Fried, Carla. “Year-End Moves to Protect Your Investment Portfolio,” consumerreports.org, November 12, 2018.

8. O’Brien, Sarah. “It’s Use It or Lose It Time for Many with Flexible Spending Accounts,” cnbc.com, December 29, 2017.

9. Dickler, Jessica. “The First Thing You Should Know About Saving Money,” cnbc.com, July 6, 2018.

10. Backman, Maurie. “Your 5-Point End-of-Year Financial Checklist,” fool.com, December 3, 2017.

11. Hewitt, Ed. “9 Creative Ways to Save for a Vacation,” smartertravel.com, June 19, 2017.

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