9 Must-Do Financial Tasks To Check Off Your Year-End List



Year-end is a special time filled with traditions, old and new, and hopefully space to relax, decompress, and prepare for a wonderful new year. 

As the final days of 2021 rapidly approach, it’s important to carve out intentional time to ready your finances for 2022.

What should go on your year-end to-do list?

Here are nine financial elements you won’t want to forget!

1. De-clutter Your Budget (Aka Spending Plan)

Are you knee-deep in a year-end spending spree? Don’t worry; we’ve all been there. The holiday season often marks increased spending, so it’s a good time to haul out your family budget. 

I’ll stop right there. First, stop thinking of your budget as, well, a “budget” as there are far too many negative connotations (spending anxiety, restrictive, feeling bad about purchases, fear of tiny little boxes, etc.)

Instead, start thinking of your budget as a spending plan. Your spending plan is a guide to help you use your money in ways that mean the most to you. When used correctly, it marries your money with your goals and values, which may mean higher spending months every now and then for travel, hosting, gifts, etc.

The key?

Take a close look at where, what, how, and why you’re spending money. 

  • Where is your money going?
  • What are you spending money on?
  • How are you spending money? Are your purchases well-thought-out or more spontaneous? Are you using your credit card responsibly? 
  • Why are you spending this money?

Knowing the answers to these questions can help you create a healthy cash flow plan. It can also help kick your not-so-awesome spending habits (we all have them!) like spontaneous purchases, retail therapy, keeping up with the Joneses, etc., to the curb.

By weaving in extra savings into your spending plan, you can have enough money to cover gifts, cook your fancy holiday dinner, and keep the lights on (literally). 

2. Max Out Your Retirement Plans

Saving for retirement should be as commonplace as meal prepping for the week. By automating your investments, you create consistent, healthy habits to help you reach your goals. 

When year-end rolls around, it’s a great opportunity to look at how much you saved relative to the annual maximums. Let’s take a look at 2021 numbers. 

  • You can save up to $19,500 in your 401(k). The total contribution limit for this account, including an employer match, is $58,000. (Those of you who have access to a Mega Backdoor Roth can get to this $58,000 number so talk to your employer to see if this is an option for you). These numbers don’t include catch-up contributions (an extra $6,500 for those over 50). 
  • The contribution limit for IRAs is $6,000 (with an extra $1,000 in catch-ups if over 50). This limit applies to traditional and Roth accounts. 

Examine how much money you’ve saved so far this year. Are you already maxing out your accounts? Can you contribute a little bit more to reach that number? A little goes a long way when it comes to investing and compound interest. If you really feel like you need to take baby steps, try increasing your contributions by 1% now or $100 a month and then set a reminder to do this again in 6 months.

Maxing out your retirement accounts isn’t only a huge bonus for “future you,” but it also provides a significant boost to your current financial situation. Contributions to your 401(k) are pre-tax, meaning that for every dollar you contribute, you actively lower your taxable income.

If you’re covered by a workplace retirement plan, you likely won’t be eligible to make deductible (pre-tax) contributions to your traditional IRA, but investing in it still provides valuable benefits in retirement. You may still qualify for a Roth IRA if your income is under this threshold. Roth accounts are funded with after-tax dollars so you won’t get a tax break when you put the money in, but your future self will thank you when you’re withdrawing this money tax-free in retirement.

3. Assess Your Debt

At Gen Y Planning, we’re all about ensuring you have a solid financial foundation. Part of that foundation is creating a robust debt-repayment plan. 

Take a look at where you’re at with your debt. Create a spreadsheet of the balances, interest rates, monthly payments, and when the debt will be paid off.

  • What progress have you made this year?
  • Did you encounter any roadblocks?
  • Are there extra resources you can allocate toward paying off debt?

Remember, the student loan payment freeze (no required payments with 0% interest) is in effect until the end of January 2022. That means you don’t have to start repaying your Federal student loans until the beginning of next year. While there’s a possibility some loans may be forgiven up to a certain amount, nothing is written in stone (or law), so we won’t know until the administration comes to a decision. 

Don’t worry—as soon as we know, we’ll let you know. 

Alongside evaluating your current debt situation, it’s important to look and see if you plan to take on any debt in the new year like buying a house, undergoing a home renovation, taking a personal loan, or a student loan for grad school, etc.

If so, be sure to include that significant purchase/investment as part of your 2022 plan. We’d love to help you create a plan to support your new goals. 

4. Keep An Eye On Your Taxes

Taxes are always a big deal, especially at year-end, because it’s one of the last times you can make strategic decisions that will impact your 2021 tax return. 

One thing is for sure: April will come around way faster than you think. So first things first, get in touch with your CPA before year-end. You may be surprised by how quickly their calendar gets booked solid. You want to make sure you have your spot for spring filing.

Once your CPA is all reserved, take a look at some of the other things you can do to affect your tax liability positively. Ask yourself,

  • Do you qualify for new tax deductions or credits? 
  • Are your advanced child tax credit payments in line with how much you can properly claim? If there’s a mismatch, you may have to reconcile it on your 2021 return. Learn more here.
  • Are you maxing your pre-tax dollars in your 401(k), HSA, FSA, Dependent care FSA, etc.?
  • Should you sell any investments before year-end? Will this trigger long term capital gains (usually taxed at 15%) or short term capital gains (taxed at your current tax bracket).

There’s also been a lot of talk about potential tax changes heading into 2022. Every day it seems there is another headline outlining proposed changes. First, remember, these changes are simply proposed; nothing is certain. 

If tax reform is on the horizon, tax rates will likely increase, especially for those who earn more than $400,000. Do you (and your spouse) fall into that category? Perhaps now is a good time to take advantage of your current tax rate, especially if it was a particularly low income year. That may mean looking into strategies like Roth conversions (converting money from a traditional IRA to Roth IRA) or realizing some capital gains at current rates. 

Remember, tax laws constantly change depending on the administration. It’s all about keeping potential changes on your radar and making the most of your situation. 

5. Continue Saving for School

Did you recently add a bundle of joy to your family? Congratulations! What a beautiful season of new parenthood. While you’re enjoying quality time with your little ones around the holidays, don’t forget about saving for their future (time goes by far too quickly—college will be here before you know it)!

If saving for their future education is an important goal for you, it’s often best to start saving as early as possible. A rule of thumb: before saving for education, ensure you’re saving enough for retirement, have a healthy emergency fund, and are paying down debt. 

Once you check all those boxes, you can move on to other investing ventures. A great way to save for college costs (and even K-12 education) is with a 529 plan. A 529 plan is a state-sponsored tax-advantaged way to save for education. While contributions are after-tax, both investment gains and qualified distributions are tax-free. 

529 plans are super flexible—you can even enroll in a plan for a state you don’t live in, though you may have to forego resident tax incentives. Depending on your state’s offerings, you may want to consider other options. 

Most 529 plans offer a limited fund menu, like a selection of mutual funds, which can get expensive once you factor in investment fees. But programs like Utah’s My529 offer an excellent alternative with a broader selection of index funds and lower expense ratios. 

Set your college savings goals early! You can also use a college savings calculator to help you create a concrete plan. 

6. Give Back Via Charitable Giving

Is giving back a year-end tradition? Here are some ways you can consider giving to charity this year:

  • Donate available funds via cash, check, appreciated assets, etc. 
  • Give your time and talents by volunteering.
  • Donate your professional skills to an organization you care about.
  • Invite family and friends to a fundraising event.
  • Find ways to give year-round.

As you can start to see, charitable giving is so much more than the dollar amount you can contribute. It’s about dedicating your time and resources to causes that mean a lot to you. 

While the best reason to be involved with charitable causes is the community and personal reward, there can also be some tax incentives to your giving. 

Typically, people think about itemizing charitable contributions. But what if you don’t have enough to itemize this year? You’ll be part of the roughly 86% of the country that takes the standard deduction.

In 2021 the standard deduction is:

  • $12,550 for single filers and married couples filing separately
  • $18,800 for heads of households
  • $25,100 for married couples filing jointly.

Thanks to the CARES Act, there’s a special above-the-line deduction for charitable donations. Single filers can deduct up to $300 for cash contributions to qualified charities in 2021. That number jumps to $600 for those married filing jointly. Keep in mind that these have to be cash donations—so keep your receipts!

You may be able to itemize if you have mortgage interest, student loan interest, high medical costs, and more. If so, extra donations to charity can increase the amount you can deduct. 

7. Use Your Health Benefits

Are you in need of a last-minute doctor’s appointment? Does your glasses/contact prescription need an update? Is it finally time to visit the dentist and schedule a filling? Do you need a new prescription?

Now’s the time to put those appointments on your calendar, especially if you have money leftover in your flexible spending account (FSA). In 2021, you could contribute $2,750. If you find yourself with money to spare at the end of the year, most plans give you a couple of options:

  • A grace period of a couple of months or
  • The option to roll over some of the unused funds. 

Remember, you can only roll over up to $550 while still contributing the maximum amount to your account next year. Any funds over that number are simply lost. Be sure to spend what you can to get the most out of your hard-earned savings!

8. Check-In On Your Estate Plan

It’s really easy to put off estate planning. With so many other responsibilities and commitments, your estate plan may not even be on your mind. But proper planning for your children, dependents and loved ones is an important task.

Take a look at the following:

  • Do you have (or need to update) your will?
  • Have you selected guardians and financial trustees for your children? These people will have legal responsibility for your children if something happens to you. With such a significant task, you want to choose someone like-minded who will respect your goals and wishes. 
  • What about a financial power of attorney? This person will make financial decisions on your behalf.
  • Have you named a healthcare directive who will make medical decisions if you’re unable?

Get in touch with an estate planning attorney (now’s the time to tap into that company benefit if you have it) to get these documents drafted or updated.

9. Set New Goals (Personal and Financial)

We can’t have a year-end post and not talk about setting new goals.

Take some time for reflection and introspection. Think through, 

  • What progress have you made on your goals this year? 
  • What new goals would you like to set? 
  • Have your priorities shifted? 
  • How can your money better support what you want in the new year?

Your goals set the tone for your financial plan—it’s what gives your plan heart, life, and meaning. Creating a goals-based financial plan helps you keep your eye on the prize—the things in your life that matter to you the most. 

Remember, there are only 24 hours in a day, 7 days in a week, and 52 weeks in a year—spend them on the things that bring you joy. 

We wish you a restful, joyful, and fulfilling new year! See you in 2022.

You might also enjoy reading: