What can you do at the end of the year to set yourself up for financial success in 2024?
In this edition of Ask April, I share a year-end checklist to help you start the new year on track toward your financial goals.
I’ll cover:
Why is an end-of-year financial review important?
Setting goals for the next 3 years
Assessing your spending plan
Evaluating your investments
Building a financial safety net
And more
Mentioned in this episode:
Transcript
April Schoen: Welcome back lovely listeners. My name is April Schoen, and you're joining me for another episode of The Secure Retirement podcast. So glad you're here. And today is going to be another Ask April segment and I'm going to be talking about an end of year checklist. Okay, so this time of year, I get lots of questions from clients about, hey, what should I be focusing on? What should I be reviewing? Is there anything that I should be doing towards the end of the year to make sure I am in good order for this year, and then I'm really setting myself up for success for the new year.
So we're going to be talking about how to get all of our financial ducks in a row. And I'm going to be going through and talking about an end of year checklist. But before we get into that checklist, let's talk about why is a financial review, an end of year financial review, why is it important? Well, first of all, a year end financial review, it's kinda like a financial health checkup. Okay. Just like you go to your doctor for a checkup. This is a financial health checkup. And this helps us reflect and helps us celebrate our wins. And it helps us gear up to be financially secure in the future.
So grab your favorite beverage, find a comfy spot, and let's start reflecting on some of those financial goals that we set at the beginning of the year. So I want you to think back to January or December of this year, and what were some of those goals that you set? When you were doing your new year resolutions maybe, when you were sitting down thinking okay, here we are at the start of 2023, what are all the things that I want to do and accomplish in my financial world?
Okay, how did you do all those? Did you accomplish them? Did you check them off the list? Are there some things that we still need to work on for next year? So I'm gonna, I'll kick things off, I'm going to share some of my personal financial wins. I'll talk about some challenges too, because let's face it, this is a journey, right? This financial path is a journey. And it's not something where we check all the things off at one time and never have to look at it again. You know, we have ups and we have downs, just like we do in life.
So as I think back on 2023, I'll share with you one of our financial wins, and that's that we paid off a vehicle. So my husband's vehicle, he has a Toyota 4 Runner, and at the beginning of the year, we set a goal of you know what we want to pay this loan off and get the car paid and be done with it. So what we did at the beginning of the year, we really started to focus in on that. We started making extra payments, we started paying more, we started building up savings, to get to a point where we could just write that check and be done with the loan.
And I have to tell you, it feels really good to do that. It feels really good to not have a car payment. Now, what we also did at the same time because we paid off that vehicle is we started taking that loan payment amount and adding it to a savings account to build up some additional reserves for a vehicle. Because we now have two paid off cars, but my car is older. It's a 2014. So we know that there are sometimes repairs that are needed for that. It could be something that happens with his 4 Runner as well. Eventually, I will get a new car.
So right now what we're doing is that money that was going towards the car loan, we're setting that aside to save up for future car expenses. Okay. Now let's talk about some challenges. Because life happens, right? And we can definitely have some financial challenges and we can have some financial bumps along the way. So you know, what are some of those things that you encountered this year? I'll tell you for us is that we had to replace our air conditioner over the summer.
So it was the worst time of the year for our air conditioner to go out at our house. It was like June/July, it took us almost a month to get a new unit in. And that was just something that we were not expecting to have to do. I remember it felt kind of warm and stuffy and the air conditioner went out and we called the repair company. And I was just thinking of something simple. Maybe it needed freon or, you know, whatever it was. It was an older unit. We definitely have been putting some band aids on it but it was just not on my radar, that we're going to have to replace that unit over the summer.
So definitely some challenges, some bumps along the way. You know, we do set aside funds and like our emergency fund our slush fund, that helps take care of things like that. Yes, we see a dip, we can build it back up again. But that's something that we kind of focused in on this year. So as we're getting into this year end financial checklist, the first thing I recommend that you do is review those financial goals.
So why is this step so important? Well, it's kind of like setting the GPS for our financial journey. And I want you to review back and think about what are your financial goals? And let me ask you, let me ask the question this way, because if you're like, April I don't know, that seems a little ambiguous. And I'm not sure my financial goals are where they should be. Let me ask you a question that might help you figure that out. And since I'm going through this, if you don't have it, first of all, if you're doing something else, come back to me, listen to this part. It's going to be really important. But grab a piece of paper, grab a notebook. So as I'm going through this, you can jot some things down.
And here's a question that we like to ask. If we were sitting here together, three years from today, and we're looking back on those three years, and we're celebrating all the success that you've had in your financial world, what would we be celebrating? Okay, and I want you to jot those down. Because whatever just came to mind for you, whatever you just thought when I said, if we're sitting here together three years from today, and we're looking back over those three years now, I'm just gonna be 2026. So it will be November of 2026. Because I'm recording this in November of 2023.
And we're looking back over those three years. And we're celebrating all the financial success that you've had, what are we celebrating? And I want you to write those things down. Because those just became your marching orders for the next three years on what it is that you want to accomplish. Now I'm going to give you a couple of ideas and some things to think about, as we're going through this checklist today. But I think it's important too, for you just to take a moment and think about what's really important to you.
So let's start talking about this financial checklist. And one of the first things that I'm going to mention to you is that I believe that you should look at your budget and your spending plan, at least on an annual basis. Okay, so let's talk about budgets. First of all, I don't like the term budget. I think budget is kind of like a four letter word, it's a dirty word, budgets remind me of like a diet, no one was going to diet. So I don't really like the idea of having a budget. But I do like the idea of having a spending plan.
So to me, a spending plan is just about being intentional about where your money's going. I meet with a lot of people who tell me, April, I don't have a budget, I don't have a spending plan. We're in a good place, we can spend and buy things that we want. And we don't really have to pay attention to really where our money's going. Okay. And that's great. I'm glad that they're in that place. But here's the truth of it. You've got to know your money to grow your money, right. And if we don't know where our money's going, then there's money that’s slipping through the cracks. It's going somewhere, it's most likely being spent on things that you don't even realize it's happening.
So I highly encourage you to have a spending plan. And is it working for you? Is your budget, is your spending plan working for you? Are there some tweaks that are needed? Because we all know, cost of living has gone up. We've been talking about inflation a lot over the last two years. The other thing that happens is that spending habits change, right? It's something that we maybe didn't spend money on before we do now. So I do recommend that we look at our spending on an annual basis.
And this isn't to be restrictive. It's not to say you can't spend money and enjoy your money because that's definitely not my motto. But it's just for you to be intentional and you know where your money is going. So take a look at a spending plan for this year. If you had one at the beginning of 2023, well, how did you do? Are there some tweaks that are needed for you as you're getting ready to go into 2024? You know, that's what I look at at this time of year, really what I pay attention to is one of those recurring expenses that are coming up?
Are they all the same this year, going into the new year or have there been some changes? One thing you may want to do as well is check your credit report. Listen, that does not sound fun. That does not sound exciting. But again, if we're giving our financial health a checkup, then it's important that we also look at some of these other areas of our financial world. And one of those things is to check your credit. We actually had a client recently who had an issue with being, he had a scamming issue come up for him. And it was very alarming, actually.
So what's important here is that we are checking our credit to make sure that there's no fraud, to make sure there are no errors on our credit report. You don't want it to come down when you actually need your credit and realize that there is an issue there for you. So every year, you should be checking your credit reports. The next thing I would recommend that you do is you evaluate your investments. Okay, so investments, they're like the engines that are powering our financial vehicle.
So I recommend that we look at them and assess how are they doing. How did our investments do this year? And are there any tweaks or changes that are needed? Here we are at the end of 2023, but we came off a very turbulent year. 2022 was very volatile in the market. And 2023 felt very similar, at least the beginning part of this year, and some in the third quarter. So check your investments, make sure they're still aligned with where you want them to be.
You know, is your asset allocation still appropriate? Are you taking on too much risk? Are you being too conservative? Those are some things that you want to double check. You also want to look at your savings plan. So earlier, I talked about having a spending plan. You know, I don't like the term budget. So I want you to have a spending plan. The other thing I want you to look at as your savings plan. Okay, how much are you saving?
So the question is, how much are you saving of your gross income? And then where are you saving at on your balance sheet? You can go back to a previous episode and I talked about how much should you be saving for retirement. So you can go back and listen to that episode, if you want some ideas there. But I just was going through this with some new clients of mine the other day. They weren't quite sure how much they were saving. And they thought that they were not saving enough. So the first thing we did was we looked and said, okay, we're all these different places that you're saving at? They had money going into two different savings accounts.
And then they had like three different retirement accounts they were putting money into. And so by the time we total it all up, they're actually doing really well from a savings standpoint. But they just didn't think that initially because they kind of have money going in different places. And they've never stopped to look at how much are they actually saving on an annual basis. And what is that from a percentage standpoint of their income.
One of the things you can do too is just double check about how much you're putting into which areas. There are contribution limits that you can make to retirement accounts, things like your IRAs, Roth IRAs, 401ks, 403bs through work. So just make sure that you are in line with those contribution limits. And then IRAs and Roth IRAs also have income limits. So just make sure that you're following the correct protocols for how much you can put into those vehicles. And that you're not violating that. That part of the IRS tax code.
And then speaking of taxes. So taxes, it's a topic that we can't escape, but smart planning can make a big difference. So think about your tax planning. And again, that goes back to some of how much are you saving and where are you saving at? And are you taking advantage of some crucial tax strategies that are available to you. And if you're not sure on that, if you're like, well, April I don't know if I am taking advantage of some known tax strategies, then I recommend that you meet with a professional. Meet with someone who can help you figure out if you're doing tax planning correctly.
Sometimes we find that clients are actually doing reverse tax planning, which is not what you want. What they're doing is they're deferring tax today at a lower rate to take it out in the future and pay higher taxes then. That's like reverse tax planning. That saving a little tax today to pay more tomorrow, and that's not what we want to do. So if you're not sure on that, make sure that you're meeting with a professional to talk about tax planning.
You also want to double check that your emergency fund is fully funded. So again, this is something I recommend that you do on an annual basis. Your emergency fund is really your financial safety net. Sometimes we call that like the moat around your castle. You know, it's like your first line of defense. And you want to make sure that you're ready for whatever life throws at you. Think back to a situation I had over the summer where I had to have my air conditioner replaced. Or last year, you know, my car needed new tires and new brakes.
So you want to make sure that you've got this emergency fund fully funded, and that when expenses come up, and you tap into it, then you have a plan for how to build that back up. Okay, very, very important. One of the things I recommend that clients do, as a part of their end of the year checklist is to do an insurance review. Now, insurance, I believe, is the unsung hero of financial security. So you really want to review what insurance plans do you have in place? Do you still have the appropriate level of coverage? Or is there something else that's needed? Do you have your beneficiary setup correct on your insurance?
So when we're talking about insurance here, there's a lot of different things you could look at. You could look at your car insurance, your homeowners insurance. Do you have disability income insurance, life insurance? There's a lot of different things. Long-term care. There's a lot of different things that you want to look at to make sure that you've got the adequate coverage that you need, that everything is set up properly. Especially reviewing those beneficiaries on your insurance plans.
And around this time of year is also a good time to review charitable giving. 'Tis the season. As I'm recording this we are really close to giving Tuesday. So I would recommend that you look at your charitable giving. And again, I think back to having that spending plan. And also having a giving plan. So we think about having a spending plan, a savings plan and then also a giving plan. So what are those charitable organizations that are important to you that you want to make sure that you're giving to every year? And how much? So this is a great time of year to do that.
This can go hand in hand with tax planning, too. I have clients who will kind of batch their charitable giving to take advantage of certain tax planning strategies. Clients who are over the age of 73, and have to take out required minimum distributions, they can also take advantage of what's called a CQD, charitable qualified distribution. So there are some things that you can do there around the charitable giving this time of year. But some of those have deadlines of December 31st. So if that applies to you, make sure you're getting that done in a timely manner.
I've just mentioned required minimum distributions. But yes, it's a great time to make sure if you are over the age of 73, and you have any pre tax retirement accounts, then make sure you've taken out your RMD your required minimum distribution. For most people, that deadline is going to be December 31st. So you want to make sure that you've taken out the minimum amount to avoid any sort of tax penalties.
So now, it's your turn. I would love to hear from you. What's on your year end financial checklists. Share with me your thoughts, your wins, or if there's any questions you may have. Is there something that you have on your end checklist that I didn't go over today? I would love to hear about this. So let me kind of quickly go back through some of these items on this checklist that we've talked about, about having this financial checkup at the end of the year.
So the first thing you want to do is you want to review your budget and your spending plan. You want to check your credit. You want to evaluate your investments. You want to make sure that you're saving enough money. That you're saving at an appropriate amount. You take advantage of tax planning strategies that are available to you. Make sure that your emergency fund is fully funded. You want to review your insurance plans. You want to review your charitable giving plans. And if you're over 73, you want to make sure you've taken out your required minimum distribution.
So I hope you guys were able to take these, dive into your financial checklist, make those necessary moves as we get into the end of the year. And before we sign off today, I just want to give you a heartfelt thank you for being part of our podcast journey, our podcast family. We've had so much positive interactions from you guys on our podcast. And it's really exciting. We're loving having the podcast back. We're so looking forward to next year and all the fun episodes we have planned for you guys. So in the meantime, let us know if there's anything that we can do to help you, and take care. Stay financially savvy, and here's to your prosperous journey ahead. Bye bye.
Voiceover: This material is intended for general public use. By providing this content, Park Avenue Securities, LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation or otherwise act in a fiduciary capacity. If you'd like additional information about our services, you can visit our website at curryschoenfinancial.com or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities, LLC. Address 3664 Coolidge Court, Tallahassee, Florida. Zip code 32311. Phone number 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, Member of FINRA and SIPC. April is a financial representative of the Guardian Life Insurance Company of America, New York, New York. Park Avenue Securities is a wholly owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.
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