The Final Third: A Year-End Financial Refresh

The financial year is divided into different phases, each with its rhythm, opportunities, and challenges. But it is the final third of the year that usually attracts heightened attention. During this period, reviewing investment performance, rerouting financial resources, and making a final push toward goals should take precedence.

Reviewing financial goals during the final third of the year is strategic for several reasons:

1. To examine progress – The final third of the year is the perfect time to evaluate goal performance. By now, one should have a fair understanding of progress compared to projections.

2. To implement corrections – Evaluation provides an opportunity to make necessary changes to work toward year-end goals and plan for next year.

3. Make charity donations – The final third of the year is a great time to donate and maximize tax deductions before the year ends.

4. Prepare for tax season – Late-year financial reviews can support tax planning and provide an opportunity to make important financial decisions that may lower one's tax liabilities.

How to identify what needs refreshing

Acknowledging the need to revamp one's finances is a crucial first step. But identifying the specific areas that need refreshing is just as important. Here's how to do it.

• Evaluate spending – Examine spending habits to identify areas of overspending and opportunities to cut back.
• Assess the monthly budget – Is the budget realistic? Are there unexpected expenses consistently popping up that need attention?
• Check on debt – Do a quick review and plan a strategy to manage it better or pay it off as efficiently as possible.
• Review investments – Work with a financial professional to examine investments. Are they performing as expected, or do they need to be reallocated?
• Review insurance – Assess whether insurance policies align with current financial situation and future goals. Without adequate coverage, assets may be liquidated prematurely if a significant life event occurs.

Planning for Next Year

After reviewing the current financial situation and making necessary adjustments, it's time to plan for the next year.

• Set goals – Set clear goals for the next year. These goals should be specific, measurable, achievable, relevant, and time-bound (SMART).
• Make a new budget – Examine income, expenses, and financial goals, and plan for the next year.
• Plan for debt repayment – Create a detailed plan for repaying debt, considering methods such as the snowball or avalanche approach.
• Examine the investment strategy – Review and adjust as needed. Diversifying the portfolio, reassessing risk, or considering other investment opportunities may be appropriate.
• Increase the emergency Fund – An emergency fund is essential for unexpected expenses. With increasing costs, increasing one’s emergency fund is vital.
• Review insurance – Review insurance policies to determine whether they still apply to your situation.

The final third of the financial year is not a time to relax but a moment to reflect, correct, and plan. By reviewing your financial habits, adjusting where necessary, and planning for the future, you are strategically setting yourself up for financial independence.