🐧 End of year financial checklist

How the hell is 2023 almost over?! 🤯 

Since it’s December, I’m starting my annual reflections (more on this soon). One thing I’m grateful for this year has been this newsletter and in particular— your readership.

Thanks for reading and supporting my work. It means a lot to me. Let’s kick it in, and finish the year strong!

Today in 10 minutes or less, you’ll learn:

• 📆 How to Review Your Spending, Debt, Savings, and Investments
• 🤩 Top Action Items for Tax Savings and Insurance/Estate Protections
• 📔 Planning Your Financial System for Next Year
• 📋️ Downloadable EOY Financial Checklist

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📋️ End of year financial checklist

Every year, I spend a few hours reviewing my automated money system to ensure I’m tracking towards my goals.

For example, have I been allocating enough cash for my 6-month emergency fund or investments? Have I been spending too much on luxurious vacations?

My recommendation: Set aside some time in December to run through this checklist:

1. Review your spending 💳

After experimenting over the years, I’ve landed on a modified version of the 50/30/20 rule as my spending framework. Use this simple guideline:

Spending Plan

• 50% fixed costs - rent, mortgage, car, groceries, utilities
• 10% savings - cash savings and emergency funds
• 10% investing - ETFs, bonds, and alternative investments
• 30% guilt-free spending - travel, gourmet meals, and new toys

If you’re following these percentages, you’re on the right track.

But, don’t be afraid to dial percentages up or down based on your goals (e.g. I’ve allocated 40%+ to savings and investing when feasible).

Action Items

• Review your actual monthly expenses against your spending plan
• Cut subscriptions you’re not using (do you need every SaaS?!)
• Renegotiate internet, mobile phone, utilities, and other service bills
• Evaluate your biggest fixed costs (like rent) — if they’re too high, consider alternatives (like moving for cheaper rent)
• Review your spending across currencies—do you have enough cash balance in each currency or are you often paying FX fees to convert?
• Identify future large expenses (like buying a home) and consider setting up sinking funds

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2. Debt 🏫

Got outstanding student loans or a mortgage? Review if you’re on track to pay them off by your target date.

If yes, great. If not, where are you getting stuck? Go back to your spending plan and re-allocate more cash towards paying off debt.

Action Items

• Review your debt payoff plan — are you on track?
• Identify spending buckets that you can re-allocate towards paying off debt (likely your guilt-free spend)

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3. Savings 🔖

Your safety buffer. Your enabler of short-term goals.

Car broke down and now you need repairs? No problem, it’s no match for your6-month emergency fund.

Want to buy your dream 3-bedroom house with backyard? You can turn that vision into reality because you’ve “set and forget” monthly contributions towards a downpayment fund.

Action Items

• Setup a 6-month emergency fund (if you don’t have one already)
• Start sinking funds for your anticipated big-ticket purchases (downpayment, wedding, kid’s international school fees)

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4. Investments 📊

Time to open up your investment portfolio.

Have you gotten everything you can out of your tax-advantaged retirement accounts? Have your asset allocations fallen out of sync due to volatility from this past year?

Action Items

• Maximize your tax-advantaged account contributions before EOY
• Rebalance your portfolio — review your asset allocation and create your desired mix of stocks, bonds, cash, and alternative investments
• Americans: Harvest tax losses — review unrealized capital losses in your taxable account that you can realize for a tax loss (offsets up to $3,000 of ordinary income and can be carried forward to next year)
• Americans: Consider a Roth conversion — move pretax retirement funds in your Traditional IRA into a Roth IRA (note: you’ll likely get hit with taxes, so talk to a tax expert first before executing this move)

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5. Tax/Charity 🏦

Taxes are an underrated parts of personal finance for high-income earners. Aside from housing, it’s often the biggest expense!

Do you know your estimated tax bill next year? What are tax deductions that you haven’t taken advantage of yet?

Action Items

• Estimate your potential tax bill for next year - use your previous tax return as a starting point
• Business owners: Decide on any additional business expenses you want to spend on before EOY to reduce your taxable income
• Make any charitable contributions you plan to make before EOY for potential tax benefits
• Prepare for income changes (e.g. becoming self-employed) by deferring paychecks or bonus until next year or applying more deductions in the current year
• Review a list of tax deductions you can apply to your tax bill — for example, apply child or education deductions if you haven’t already

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6. Insurance/Estate 👨‍👩‍👧

This checklist wouldn’t be complete without protections from downside risks. Stuff no one ever wants to think about, but is so important.

Are you and your family’s health covered? If you have children, have you planned out how you’ll pass on your estate?

Action Items

• Homeowners: check if your insurance policy covers your home against any disasters
• Health insurance: check if your current plan provides sufficient coverage — if it’s not enough or too much coverage, consider switching plans
• If you have dependents, create a will and ensure they’re protected by a life insurance policy
• Americans: Consider making gifts to heirs while you’re still alive to reduce your estate tax exposure

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7. Plan for next year 🔮 

Let’s shift gears from hindsight to foresight—aka your hopes, fears, and dreams for the future.

Action Items

• Reflect on your money goals from this year — did you achieve them? Why or why not? What did you learn about yourself through your efforts?
• Spend a couple hours defining your top 3-5 financial goals for next year (with your partner)
• Start tracking your net worth next year using a spreadsheet or tool like Kubera (email me for $100 off)
• Update your automated financial system — set scheduled transfers to savings and investment accounts based on your goals
• Start the side hustle you’ve been putting off for months or years (finally)
• Create a plan to find your dream job or get promoted

Liked this checklist? Download a PDF copy 📥️ 

Managing your finances doesn’t have to be a total pain in the ass.

Start your next year feeling confident, energized—and in control.

Get your copy of this checklist.

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📆 How I can help

That’s all for today!

Whenever you’re ready, here’s how I can help you:

1. Work with me 1:1 - Book a coaching session for your next career transition.

2. Work with my tax team - Get personalized guidance from a US expat tax professional.

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