Annual financial review checklist

A new year brings new possibilities, and setting financial goals is the first step in working toward a more secure financial future.

Use this annual financial review checklist to identify your priority areas, along with tips and resources to help you kickstart your progress.

1. Review last year's spending

“Financial planning starts with a budget,” says LeAnn Erenberger, Wealth Management Advisor with U.S. Bancorp Advisors. “Knowing what it costs you to live per day, per month and per year can help you clearly see what you have left to put toward your other goals.”

• Track your expenses to understand where your money is going, then create and stick to a realistic budget that covers essential spending, discretionary spending and saving.
• Make a plan to pay down and pay off high-interest debt like credit cards.
• Set long-term goals, such as retirement, and save money each month.

2. Prepare for retirement

Retirement planning comes in phases, and you’ll want to consider ways you can maintain your lifestyle in retirement. “While maximizing your contributions is the best way to accumulate wealth, you’ll want to make sure you’re at least investing enough to get a company match,” says Erenberger.

• Increase your retirement savings if your income increases.
• If necessary, assess and reset your retirement expectations.
• If you’re already retired, consider potential income streams.

3. Plan your major purchases

While lifestyle spending covers everyday finances, you may also be planning for major purchases in the next three to 10 years, such as buying a vacation home, remodeling your current home or going on the trip of a lifetime. Make those dreams come true by planning for the purchase today.

• List your dreams and major purchase goals.
• Determine the cost for each goal.
• Plan how you’ll pay for them by exploring savings accounts or financing options like loans and lines of credit.

4. Prepare for the unexpected

Financial security means planning—and saving—for rainy day and unexpected emergencies before they happen. “You’ll want to make sure you have proper insurance in place for you and your family’s situation,” adds Erenberger.

• Set up an emergency fund and contribute to it regularly.
• Consider life insurance and/or disability insurance to protect you and your family.
• Review your insurance policies annually to make sure it meets your needs and flexes with your life.

5. Save for education

If you have young children, you may want to send them to private school or start saving for college. You may even be considering your own education goals. Advance planning can help you and your children avoid taking on a large amount of student debt.

• Determine how much you want to contribute and how much will be the responsibility of the student.
• Identify the most efficient way to save.
• Start an education fund, such as 529 plan or a Coverdell education savings account (ESA).

6. Create or review your estate plan

Essential documents, such as a will, trust, and financial and healthcare powers of attorney are necessary for proper estate and legacy planning. “If you don’t yet have a will, this should be the first thing you do in the new year,” says Erenberger. And don’t forget to talk to your family about your plans.

• Set up and review your will.
• Review your beneficiaries on all your insurance policies and financial accounts and make any changes needed.
• Consider whether a trust is right for your needs.

7. Assess your investment risk tolerance

As you age and you take on more responsibilities, your tolerance for risk will change. It’s important to review your accounts each year to ensure your portfolio is in line with your financial resolutions and needs.

• Revisit your level of risk tolerance.
• Make sure your investment portfolio is diversified.
• Rebalance your portfolio if it has shifted due to last year’s market activity.

8. Take steps to minimize your taxes

Erenberger strongly suggests protecting your money by maximizing every tax advantage. “Your financial resolution should be to keep as much of your money as you can,” she says.

• Check that your investments are tax diversified.
• Max out your retirement account contributions each year.
• Make sure you’re having enough tax withheld from your income to avoid penalties or a large tax bill in the future.

9. Plan your charitable giving

Charitable giving not only provides you and your family with an opportunity to make a difference. Making sure you're doing it in the most tax efficient way possible is an important part of financial planning. 

• Create a charitable giving plan for you and your family.
• Incorporate year-round giving into your financial plan.
• Consider donating assets that have increased in value directly to your preferred philanthropic causes for tax efficiency.

10. Track your healthcare spending

While healthcare enrollment is usually done in November, the new year is a good time to make sure you’re taking advantage of your benefits and maximizing financial tools such as your health saving account (HSA).

• Use your HSA for qualified medical expenses.
• Prepare for healthcare costs in retirement by estimating and planning for predicted expenses.
• Track healthcare spending so you can choose the best plan in the fall.

11. Consider any long-term care needs 

Whether you’re caring for an aging parent or considering your own long-term care needs, you’ll want to understand how you’ll pay for it. Planning for the future will involve exploring insurance as well as reviewing assets that can be available.

• Make a list of long-term care facilities and determine average costs.
• Talk to a financial professional about long-term care insurance.
• Review your current assets to determine saving goals.

Turn your financial goals into a financial plan

If you need assistance staying on track toward your financial goals, consider talking with a financial professional. They can work with you to design a financial plan that helps you prioritize your goals and work toward your next stage of life—whether it’s saving for a dream purchase, paying for a child’s education or transitioning into retirement.

Whatever your financial goal, learn how our planning process may help you gain the clarity and confidence to take the next step.