It’s that time of year again and no doubt you are looking forward to celebrating with your loved ones and the chance to indulge in the festivities. But the end of the year provides an excellent opportunity to review your financial situation from the previous 12 months.
With that in mind, here are the Lendwise 12 Days of Financial Christmas.
Day 1: Review your emergency funds
Have your emergency funds remained intact over the course of 2022? Does it need a top-up? Your easy access to an emergency fund should equate to 6 months’ worth of expenditure. If your income and expenditure have increased this year, you should consider stocking a bit more into your emergency fund to match the increase.
Day 2: Check your credit card
This may not involve everyone, but we all know it’s not great to have debt. Interest on a credit card can be very high and the interest is not a prime example of money management. If you have some debt, now is the time to clear them out before the year’s end or come up with a payment plan to do so – start 2023 in better financial shape.
Day 3: Check your pension
The end of the year is a good time to review your pension. Are you on track to meet your retirement goals? Could you increase your monthly contribution? Is there anything you can do to improve your situation?
Day 4: Check your monthly budget
Most bank accounts now make it easy to track how you have spent your money each month. They include tools on how much you spent on food, bills, and meals out compared to previous months. This month, you should take a look at how you spent your money and if necessary, identify areas where you could spend less.
Day 5: Revisit your investment goals
Did you meet your 2022 investment goals? If you are on track, you may give yourself a pat on the back. If not, what would you need to change for 2023? Perhaps you need to diversify your portfolio through various investment paths. You may select a more appropriate wrapper to reduce your tax liability while maximising your returns.
Day 6: Review your investments
Portfolios need managing and you should have a look to see how your investments are doing. The end of the year is a great time to touch base with your financial adviser to renew how they are going while giving you an opportunity to identify other potential investment plans.
Day 7: Big future expenditure
Do you have any major plans to spend big in 2023? Do you plan to purchase a house, or a car, get married, or start a family? All of these require forward thinking and pre-planning so get your calendar out and plan out your savings and expenditure cost for the next year.
Day 8: Review your beneficiaries
Unfortunately, we have recently experienced an uneventful world pandemic and the day of tomorrow can always be unexpected. It’s worth revisiting your will, life insurance or pension to review any beneficiaries you may have in order. This task can easily be forgotten from the chaos of everyday life, so making an effort to take stock at the end of the year is a good idea to keep things in check.
Day 9: Sorting out your tax
While this does not apply to all, for some countries, December means the end of the tax year. December could be the last chance to reduce your tax liability by topping up pension contributions or charitable donations.
For those self-employed in the UK, this would give you a clear opportunity to check your account ahead of the tax year ending in April.
Day 10: New financial adviser?
Based on your investments over 2022 compared to 2021 (if applicable), are you happy with the advice you have received? If not, 2023 is the year to make adjustments and find a financial adviser who is more in tune with your goals and visions. Have a look at our blog on How To Find A Financial Adviser In The UK.
Day 11: Protect Wealth
Most often, wealth creation takes the lead over wealth protection. In most cases, this is perfectly fine, however, wealth protection is equally as important. Take a step back and assess your wealth and ways to protect it – you cannot make wealth if all your wealth is lost. Any insurance is a good first step and you may want to seek income protection in case of any unexpected event.
Day 12: Set new goals for 2023
Now the last day has arrived, it’s time to look over the past year and what you want for the next calendar year. Creating concrete targets is the way forward if you are looking to create a stronger financial position by the end of 2023. Before you jot down a target position, think about what you would like to achieve by the end of 2023.
Do you have debt? Are you looking to make a big purchase? Create a list and a budget planner and try to stick within your means.