How I Wrap Up My Financial Year

by Kevin on December 13, 2012

The holiday season is one of my favorite times of year. There is an endless array of random college football games on television, work slows down just a little bit, my wife is out of school, and we get to see a lot of family.

Oh, and eggnog. I love eggnog.

Another important part of the holidays that I don’t necessarily love, but I put up with: wrapping up the financial year. Even though I don’t love this task it is one of the most important things you can do during the holiday season.

How to Wrap Up Your Financial Year

Avoiding doing prep work to wrap up your year is one of those “penny wise, pound foolish” things. Taking just a little bit of time in December to get all of your financial ducks in a row will make the first few months of the next year go much more smoothly. Here are some of the tasks I make sure I complete at the end of the year.

Double Check Addresses for Financial Accounts

As your financial empire grows you will have an increasing number of financial accounts. When I first started out on my own I had a checking account and an online savings account.

I now have:

  • multiple rewards checking accounts (that pay better interest than savings accounts)
  • multiple online savings accounts with ING Direct (sub-accounts for different goals)
  • two Roth IRA accounts (one for my wife and me)
  • two investment trading accounts that we signed up for primarily a sign up bonus
  • a mortgage
  • charities we support

It is a lot of stuff to manage which also means there are a lot of year end statements I am supposed to get in the mail. From W2s from employers to 1099 interest statements, not only do I need the financial documents to do my taxes, but tracking them down after the fact is a pain.

By investing maybe an hour of my time, I can log in to every account and double check the address they have on file. This hour of time will save me countless amounts of time reaching out to customer service early next year to get them to re-send my information to the correct address. (Not to mention worrying about what sensitive personal information might be on any forms that are sent to an incorrect address.)

Make Last Minute Donations and Deductions

The next thing we do is make our last minute donations. This isn’t just running down to Goodwill or the Salvation Army to drop off another bag of clothes, although we usually do that. We also try to go ahead and make January’s charitable donations in December. You get the same tax benefit as you would donating in January, but you don’t have to wait until more than 12 months after the fact for the tax break. Donate in December and file your taxes in February means you get much faster result for your donation on a tax basis.

The same holds true for your mortgage. If your mortgage is due on January 1st, pay it on December 30th so the interest charge for that month counts on this year’s taxes.

Look to the Future and Plan

The last thing we do is look into the coming year and plan out our goals. We grab a calendar and look at major events like vacations, work trips, and the like. Planning in advance makes the year go a bit smoother than reacting on the fly. You can’t anticipate a lot of what happens in the coming year but knocking out some of the major items helps put my mind at ease.

Final Thoughts

Wrapping up the financial year doesn’t have to be a complicated issue. To me it is more about investing a few hours here and there to avoid spending countless more time in the following year cleaning up problems. Being able to see the big picture of what might happen in the coming year helps too.

What do you do to wrap up your year from a financial perspective?

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