How to Do a Personal Year-End Review

by Neal Frankle, CFP ®

Happy Holidays and Merry Christmas Pilgrim!  You’ve worked hard over the last 12 months and you deserve some R&R.  But don’t hit that eggnog just yet.  Lets review all you’ve done so far and celebrate it.  But while we’re at it, let’s create a list of those items that deserve your attention for the upcoming year.

 6. Compare Your Net Worth

To be frank, this isn’t a super important review item for me. That’s because I can only control my actions and not the outcomes. I do look at the changes in my net worth, but I don’t let anyone “get all up in my grill” based on the outcome.  Here’s why.

You could have spent too much money and your net worth could still expand if the market was good like it has been for the past several years. Conversely, you could have done everything right and you net worth could have declined anyway if the market was bad. You can’t berate yourself for those things which are beyond your control.  But you should run your financial plan and determine:

  • Are you on track to achieve your goals? If so, why? If not, why not?
  • Do you need to change anything about you spending, savings or investing?

I suggest that you put together a very simple spreadsheet with your assets and liabilities. This way it’s easy to update each year and compare results.

5. Compare Budgeted to Actual Savings

This is where the rubber meets the road, Pilgrim. First, make sure you have an easy way to track how much you are saving. (This includes retirement contributions, investments and even those extra payments towards your mortgage.)

All your year-end investment statements will spell out how much money you’ve added regardless of the market value of those accounts right now. Compare what you actually saved against your planned savings. When you look it over, are you on track? If so, can you bump up your savings for next year because of an improvement in your income situation? If you aren’t on track, what do you have to do differently? Is it time for you to launch that side business?

4. Compare Budgeted to Actual Spendingyear end review

This is closely related to the point above – but slightly different. You might be at a point in your life where additional savings isn’t all that possible or all that important. In that case, it’s still critical to examine what your spending patterns are. I am a huge fan of YNAB software program (You Need A Budget) because it’s an easy-to-use program that tracks exactly what you spend. You set up budgets and download your data to make sure you are on track. What’s nice is that this software tells you exactly where the problems are – if there are any. Whatever system you use, make sure you have a system in place to give you the information you need.

3. Estate Plan and Life Insurance

If you’ve updated your living trust or will and/or reevaluated your life insurance this year, there is no need to do it again now. But if you haven’t done this recently, now is the time to schedule a review. Do you need to change your trust? Do you have enough life insurance coverage?

I know that your plate is full and your head isn’t really in the financial arena at year end. That’s why I suggest you schedule time to work on this. Your estate plan and life insurance are critical. Get it done, but get it done right. Take your time. Schedule a time when you’ll have a good chunk of time to thoroughly review your life insurance and your estate planning documents.

2. Investment Strategy

Your investment strategy is something that shouldn’t change all that often, but sometimes a change is warranted. Consider how much risk you are taking. Is it appropriate? Should you be a bit more aggressive with your investments? Should you throttle back? It’s OK if you don’t have the answers. Schedule a time to meet with your advisor (if you have one) for the first part of January.

1. Procrastination

What have you been putting off? What one thing did you really want to accomplish this year that didn’t happen? Think ahead 12 months. Pretend you’re looking back on what you’ve accomplished. You finally did that one thing that had a huge impact on your life. You feel great because you had procrastinated for years and the achievement had alluded you for too long. What is that one thing? What can you do today to get the gears in motion to make that dream come true?

What is your year-end review like? What should be added to this list?



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