End of Year Budget Strategies

A little end of year planning can establish financial goals and habits, for a more successful New Year. Taking time in December to review the past year, should include assessing financial benchmarks you wanted to achieve. What did you want to accomplish financially and how successful were you? Consider successes and failures and put measures in place to rectify weak areas.

In Senator Elizabeth Warren and her daughter Amelia Tyagi’s book, “All Your Worth: The Ultimate Lifetime Money Plan,” they advise spending no more than 50% of your paycheck on the must-haves, 30% on things you want, and the last 20% to pay off debt or build savings.

Regardless of how much money you dedicate to improving your financial position, there are areas which should receive an annual review.

Investment Goals

When reviewing investment goals, evaluate how your investments are helping you reach specific life goals, which can include retirement, funding a child or grandchild’s college fund, traveling, or purchasing a second home.

Building a house requires a plan. The architect, contractor, and construction workers follow a blueprint when designing and creating a beautiful and well-constructed home. Investment goals begin with the same principle. You must first be the architect of your finances and determine financial priorities, which serve as the vision for your retirement. From there you create an investment strategy, which serves as the blueprint for successful implementation. The work of investing should be consistent with both the vision and the established blueprint to achieve the final result you want.

Just as an inspector verifies the quality of the construction at each stage of development, you must frequently check in and measure progress, to keep you motivated. You are more likely to continue when you have a clear view of the progress you make.

Analyze the amount you contributed to long-term financial priorities in the past 12 months, and then consider how you can increase contributions next year. Automating the process through direct deposit increases the likelihood of success.

Savings Goals

While investment goals tend to focus on the long-term, savings goals take care of short-term needs like holiday spending, vacations, home and car repairs, and so forth.

The current holiday season can lead to an assessment of how well you plan for present needs. Do you have enough to cover this year’s spending, or will you rely on credit or an unanticipated withdrawal from savings to cover the costs?

You can predict many of your short-term costs. Birthdays, holidays, and property taxes come due at the same time every year. For success, beginning in January, save what you need to cover these expenses, breaking the cost down by the week or pay period. Explore last years cost to calculate an accurate figure to reach. Put the money in a separate account for easier tracking. Saving $20 each week will add up to over $1,000 in 12 months.

Emergency Fund Goals

Financial experts recommend having between three to nine months’ worth of expenses saved in an emergency fund. Preparing for the unknown allows you to maneuver through financial difficulties. Job loss and serious illnesses can derail the most well thought out plans.

Begin with a review of monthly expenses, to determine how much you should save in your emergency fund. Only include necessities such as the house payment, utilities, car payments, food, and gas. You can cut back on spending for non-essentials, requiring you to save less than your current monthly income.

Surveys reveal a major shortage of emergency funds, reducing the level of financial security most would like to have. It can be overwhelming to think of savings for nine months’ worth of expenses. However, starting with a small amount, each paycheck will increase savings quickly as the account grows.

Debt Reduction Goals

The average household owes more than $16,000 in credit card debt based on a recent NerdWallet study. High-interest rates factor into the fast accumulation of credit card debt. On average, households pay $1,292 towards interest annually.

Debt adds stress to your finances and can hurt investment and savings goals, by depleting funds. To create a debt payoff strategy, consider your total debt, your credit, and the amount of financial discipline you have. You may be able to set aside your cards and pay down debt one card at a time. Other’s with good credit and strong income, might qualify for a loan consolidation, that will immediately provide relief through lower interest rates. When you have maxed out cards and marginal credit, it may take more creative tactics to lower debt balances.


Medical costs have spiked 57%. To lower costs, complete an annual review of health care coverage during your open enrollment period. How often did you use your benefits? Are you comfortable with the co-pays or could you handle a higher amount? Raising co-pays and deductibles are an effective way to save on health insurance. You can then redirect the premium savings into a Healthcare Savings Account (HSA) for tax-free growth of money you can use towards future health care needs.

Company Benefits

Part of the advantage of employment is the company benefits. Review your benefits package to ensure you are taking advantage of all the perks offered by your company. Employers often include more than health insurance and a 401K match. You might save money on your cell phone plan, gym, independent insurance or other programs?

Insurance Review

An annual review of insurance needs addresses your family’s coverage needs, without overpaying. There are many different types of insurance policies, including vehicle, medical, dental, vision, life, disability, long-term care, and so forth.

Employers may offer different policies as part of the benefits package, or you can purchase them independently. You may save money on policies purchased through your employer, although you often cannot take them with you if you change jobs. Evaluate which policies you need as well as the correct amount of coverage.

Analyzing your financial patterns and finding ways to manage money more efficiently can improve your finances each year. Consider your circumstances and goals to proactively allocate the income you receive based on your financial priorities.

If you are struggling with large amounts of high-interest credit card debt, contact the specialists at Finance Solutions today at (855) 331-4852 to receive a FREE debt analysis.  They will review your current situation and develop a customized plan to help you reduce your credit card debt.





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