Just Do It! Your Year-End Financial Review

December 1, 2020

We are near the end of the financial year for individuals, and it’s time to bite the bullet and review your personal finances. You should be checking and organizing your finances on a monthly basis, and your year-end financial review should be based on these monthly check-ins. But there are certain aspects you want to carefully review before the year-ends to see the big picture:  where you are, where you want to be and what changes you need to make.

Let’s face it, not everyone carefully takes stock of their finances every month. If you are in debt, you may be particularly likely to avoid facing the grim truth. 73% of Americans die in debt. If you don’t want to be one of them, you need to stay on top of your finances. If setting up a monthly process and doing a year-end financial review is beyond you, get the help of a financial adviser. It will save you in the long run. Here is just a snapshot of some areas to analyze.

Organize Your Financial Information

Determine Categories

Before you can know where you are, you need to structure your information. Keep your bills in once place and organize them into categories as they arrive. Also organize other information crucial to your finances and keep it in an easily accessible locations. Consider what makes sense for you, but consider separate folders for paper bills such as

  • Bank statements
  • Mortgage, home repair, home appraisal, homeowner’s insurance
  • Other loans
  • Credit cards
  • Utility bills
  • Estate documents
  • Investments
  • Property tax
  • Income tax
  • Employment and retirement (employee benefits, 401K, etc.)
  • Life insurance
  • Medical bills and insurance
  • Legal (such as court settlements, etc.)

If you pay bills online, copy the bills and put them in an online filing system, or if it suits you, you may also want to scan and print paper copies. Whatever system you use, use it consistently.

Decide What You Need to Keep and What to Throw Away


  • Tax -related information for a minimum of three years. Consult Publication 17, Your Federal Income Tax (For Individuals) for more detailed information about what you should keep for tax purposes.
  • Monthly statements until you get an end of the year document that includes the information
  • Anything you are unsure if you should keep it or not

Throw away

  • Outdated documents that have been replaced such as old insurance policies
  • Irrelevant scraps you can’t remember why you kept

Consider Using a Personal Finance App

There are a lot of apps on the market to help you organize your monthly finances and your year-end financial review, create a budget and meet your financial goals. Some of them are Mint, Personal Capital and PocketGuard to name a few. Take advantage of friendly technology rather than recreating the wheel.

Track Your Spending

Once you have your information in front of you, before you can meet goals or make plans, you must track your spending each month. If you have not been doing this, now is the time to start before the end of the financial year. If you have not been tracking, you may be surprised to discover where your money is going.

Review Your  Financial Progress

If you had set up any financial goals for the past year, review how close you are to meeting them. These might be anything from paying down debt, saving for retirement or a new car or putting enough aside to hold you over in an emergency. When you make comparisons with the previous year, ideally your investment value and savings should be more while your savings should surpass your spending.

To check your progress for your year-end financial review, you will want to

  • Determine your net worth which is your assets minus your liabilities. This is the baseline you need to know in order to track progress toward your goals (or the lack of it). How much has your net worth improved or declined from the previous year?
  • Review your debt. If you have credit card debt, consider getting rid of most of your credit cards. Use the one with the lowest interest. You may also want to review whether there are credit cards that can give you a better deal and transfer your debt.
  • Determine the percentage of your income that you are saving (your savings rate).
  • Review your credit reports. Due to the pandemic, you can request your credit reports every week from the three major credit reporting agencies, TransUnion, Experian and Equifax now through April 2021 without paying a fee. Simply visit AnnualCreditReport.com. You probably already know that usually you can get a credit report free of charge only once a year from each of the big three credit agencies. So after April, instead of checking all of them at the end of the year, you may want to divide the year into thirds and check one of them every four months. That way you can better keep a handle on your progress. What your credit reports tell you should influence how you set and adjust your financial goals.

Set Financial Goals for the Coming Year

After you have reviewed where your finances stand and how you did in meeting this year’s goals, it’s time to set financial goals for the upcoming year. Write down your goals and them prioritize them. Maybe you want to completely pay off your biggest credit card debt. Or maybe you have paid down your debt to the point you are ready to start saving for a house or a much-needed vacation.

Adjust (or Create) Your Budget

Once you have written down your financial goals, adjust your budget to help you achieve them. You don’t already have a budget?  Then it’s time to create one before another year goes by. List your income and its sources, your fixed expenses and the minimum you must pay for your debts. You can then determine how much to spend on flexible expenses such as leisure and retirement accounts, how much to put into savings and how much to use beyond the minimum debt payments to pay down debt.

In general, about 35% of your income should go to rent or mortgage, utilities and groceries. If you live in an expensive part of the country, this may be more. You will also need to figure out how much to spend on other things such as leisure, transportation, savings and debt. Some prefer to not save until they have paid off all their debt, but this can leave you with no savings. Try to put aside 10% of your income for savings.

Automate what you can, so you don’t need to make a decision every month about where your money goes. When your money comes in, set up automatic systems where bills are paid, savings is deposited, retirement accounts are fed, etc.

Determine Your Debt Priorities

Once you have determined how much money you will use to pay down your debts every month, you still need to allocate it. Let’s say you have decided that 15% of your income will go toward paying off your debts. Once you allocate for the minimum payments, what debts should you pay first?

The most recommended method is to pay the remaining amount toward your biggest debt. This should result in paying less interest in the long run.

However, if you feel like you are getting nowhere with your debts and you are losing motivation, you might consider an alternative method of paying your smallest debts first. Paying off some of their debts completely is a strong motivation for some.  However, this method is likely to result in you paying more interest over the long haul, and interest is nothing to sneeze at. For example, the average U.S. household with revolving credit card debt has an estimated credit card balance of $6,849 that costs them $1,162 in annual interest.

Review Beneficiaries

Make sure to review your life insurance policy, retirement accounts and other entities that pay a beneficiary when you pass away to be sure they are up to date. Consider that if you divorce and then remarry, but you never replace your ex as a beneficiary on your life insurance policy or retirement account, your ex is going to reap their benefits rather than your current spouse.

Review Insurance Policy and Retirement Account Terms

Life Insurance

Be sure that your life insurance policy covers your current reality. For example, if you have had children since you took out your policy, you may want to increase your coverage to meet their needs should you suddenly pass away.

Retirement Accounts

Likewise, you may need to update your retirement accounts during your year-end financial review.

  • Try to at least put aside the amount that your employer matches.
  • Determine if you want to change your current retirement plan investment options. The closer you are to retirement, the more conservative you may want to be because there may not be time to make up for losses.
  • Double check the management fees for your investment plan. Try to keep them under 0.1%. Excessive management fees mean less for your retirement.
  • Consider consolidating your retirement accounts if you have more than one to simplify management. There are sometimes reasons for having more than one, though, and discussing this with a financial adviser is wise.

Review Tax Issues

There are various ways to reduce your taxes if you act before the end of the year. A good example is that if you plan to make a charitable donation in the near future, you may want to do it before the end of the year in order to get the deduction on this year’s taxes.

Going through all end-of-year tax issues is beyond the scope of this article, but be sure to consult with your tax professional or examine these yourself if you do your own taxes. There is no reason for you to struggle alone to get a handle on your finances.  Getting the help of a financial professional may be worth its weight in gold in the long run and not just for tax issues.

Call Us if You Don’t Know Where to Turn

As do your year-end financial review, you may realize you are in so much debt that you don’t know how you will ever get out. If that’s the case, or if you are being sued for a debt, contact Michael Ziegler, PL, Attorney Debt Fighters for a free consultation by submitting this form or just call us directly at (727) 538-4188 in Clearwater, (813) 225-3111 in Tampa or (352) 600-1326 in Mt. Dora. Mike what about phones for these other cities listed on your website?

We can help you with debt consolidation, debt litigation defense, and, if it comes to it, bankruptcy. The sooner you contact us, the more options may be available to you. Video and phone consultations as well as in-person consultations are available.

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Michael Ziegler
Ziegler Diamond Law: Debt Fighters, provides effective legal services to consumers in Clearwater, Florida, and throughout the Tampa Bay area who are facing home foreclosure, unmanageable debts, debt collector harassment, or other debt-related problems.

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About the Author

Ziegler Diamond Law: Debt Fighters, provides effective legal services to consumers in Clearwater, Florida, and throughout the Tampa Bay area who are facing home foreclosure, unmanageable debts, debt collector harassment, or other debt-related problems.