January 1 is right around the corner and that means making resolutions and plans that will hopefully give us manageable goals to attain in the year ahead.

While you’re making plans to lose weight, read more, or take a cooking class, how about making plans to check on your financial health? It’s the perfect time of year to look back at where you are financially and look ahead to where you’d like to go.

Whether your goals include saving up for a big purchase like a house or car, retirement, paying for next year’s vacation, building up your emergency fund or finally paying off those credit cards, here are a few tasks you should check off your year-end financial to-do list.

Review or update beneficiary designations

Make any needed updates to the beneficiary portion of your bank accounts, retirement accounts, life insurance policies and annuities. Things change over the course of a year; babies are born, people get married and loved ones exit our lives, whether through death or divorce. Whenever those changes happen, it’s important to consider who will benefit from your careful financial planning once you’re gone. Choosing a beneficiary for your life insurance policy is a big decision, because beneficiaries trump who’s named in a will.

Review tax withholdings

Those big events I mentioned before (like births, marriages or deaths) can also have big tax implications as well. You may need to change your withholding amount as a result. Check out the Tax Withholding Estimator. It’s a handy tool for anyone who wants to effectively tailor how much income tax to withhold, regardless of employment status.

Check in on your emergency savings account

Everyone should establish an “emergency fund” that can cover 3-9 months of your living expenses. If you don’t have an emergency fund already, now is a great time to start one. First, calculate your monthly cost-of-living. Assume that if you lose your job, you’ll sacrifice luxuries such as eating out or your premium cable TV package. How much do you really need to survive? Divide that number in half. Can you save this monthly? If so, you’ll build a six-month emergency fund within the next year. Start small by shooting for a quick $1,000 fund first, then build up to a fully-funded 3-6 months of living expenses. Quick tip: make saving automatic. Set up your direct deposit so that a certain percentage of your paycheck is automatically deposited to your savings account, and the rest into checking. You’ll never miss what you don’t see.

Fine tune your savings goals

A general rule of thumb is that 20% of your income should go towards savings. But, aside from an emergency fund, what else should you save for? First, set a short-term savings goal or two. Short-term goals are something you want to complete within a year. For example, paying for a nice vacation, your property taxes or a new television are all good short-term goals. Figure out exactly how much you’ll need and by when.

Next, identify a mid-range goal. This is a goal that you plan to reach within 10 years. Things like purchasing major appliances, a new roof, a car, or a down payment on a home are good mid-range goals. Again, jot down approximately how much you think you’ll need.

Finally, identify your lifetime goals. For most people, this is saving for retirement. If it’s easier, or you’re not sure about mid-range goals, you can list broad categories like “home repairs,” “holidays” and “vehicle expense.”

Write down each savings goal and deadline. Divide by the number of months remaining to see how much you should save. Want to pay cash for a $30,000 car in five years? You’ll need $500 per month.

When you run through this exercise, you’ll probably discover that you can’t save enough for every goal on your list. You have four options:

  • Re-think your goals
  • Lengthen your timeline
  • Cut your current spending so you can allocate more to saving
  • Earn more

Most people opt for a combination of those four choices. You might decide you’d be happy buying a $20,000 car, which will require only around $300 per month. You cut your $80 cable bill and pick up a side gig one or two days per month, and voila – now you’re on-track to pay cash for your next car.

Happy New Year! Here’s to starting of 2022 on a great financial foot.