About 10 years ago, I put together a year end checklist. I did so because I wanted to see how much financial progress we had made during the year and because I didn’t want to be blindsided by our tax bill on April 15th. In the years since, my wife and I also began budgeting, so I’ve added a few items related to that as well.


The year end checklist has made a real difference for a couple of reasons. First, seeing progress year-after-year – and particularly over the course of several years – keeps us motivated to stick to our plan. Estimating taxes well in advance allows us to identify anything we might do to reduce taxes and to set aside reserves for what we’ll owe. Finally, reviewing our actual spending versus budget helps keep us within spending limits and lets us know what we might need to adjust for the coming year. The specific steps I follow and when I take these steps are as follows:


  • Update books for the business – a large part of our income comes the financial planning practice’s income. This amount can vary a good bit from year-to-year, so I make sure the books are up-to-date and I have an accurate estimate of income by the end of September.
  • Work with accountant to estimate taxes – once the books are up-to-date, I can work with my accountant to estimate what we’ll owe in taxes for the year. Our tax situation is pretty straightforward, so our options for reducing taxes are limited, but knowing which tax bracket we’ll be in for the year is useful in estimating how much additional retirement savings will reduce our tax bill.


  • Estimate cash on hand at year end– by mid-November, I can project how much cash we’ll have on hand at the end of the year. Once I’ve estimated this amount and confirmed that it will be enough to cover taxes and bills, I can decide how to allocate any excess cash between paying off debt and adding to savings.
  • Check in on holiday spending – our spending goes up around the holidays every year because of gifts, events and travel. We save throughout the year for holidays and travel, and in mid-November we make sure what we’re planning on spending is in line with what we’ve set aside in reserves. Doing this eliminates the chance that I’ll have a panic attack when I see the UPS guy stopping at our house for the fifth time on December 23rd.


  • Review actual spending versus planned spending – in mid-to-late December, we take a look at what we’ve spent during the year versus what we budget in various categories. Based on how we’ve done, we can make changes to the categories. The goal in doing this is to keep overall spending the same, but shift amount categories to reflect what we actually spend.
  • Agree on any changes to discretionary spending– we have several completely discretionary categories in our budget, including travel and vacation, personal spending and holidays. If the upcoming year looks good, we may adjust these upward or – if we’re planning a big trip or purchase – we may shift spending among categories.


  • Update personal balance sheet – I always enjoy doing this because it makes the financial progress we’ve made over the short-term clear. How much we’ve added to savings and how successful we’ve been in paying down debt are all there in black and white – and that gives us a real sense of accomplishment given all the hard work we put in over the prior year.
  • Update our financial plan – updating the plan allows us to see how we’re progressing towards our long-term goals. A down market may overwhelm short-term savings, but most years the market is up. In those years, if we have hit or exceeded our savings goals, we see clear, incremental progress.

Your own year end checklist may differ a bit, but in general if you touch on taxes, cash flow and planned savings and spending, you should be in good shape. One other thing to add to the year end checklist, if you’re not working with an advisor, is a periodic review of your investment portfolio to make sure it remains reflective of your needs. Once your checklist is in place, stick with it over time and it will become an invaluable tool in keeping you financially on track.

Micah Porter is a financial advisor in Decatur, Georgia. Thanks to the magic of technology, he works with clients nationwide from his office just outside Atlanta.