End of year accounting



If you’re anything like the majority of Americans today, you are very connected to the internet and are constantly being fed information, whether it be true, partially true, partially false, blatantly false, or satire, you’re being fed something. If you just read the headlines throughout the year, you’d have no idea how your portfolio fared or what the value of your home looks like. On any given day, you could read an article titled “How real estate can make you rich in 2022” with a subsequent article that states “How real estate will slow your investments in 2022.”

In the end, all that matters is what ACTUALLY HAPPENED, so maybe you should take a look.

Keeping tabs on yourself

I keep a close eye on my overall portfolio throughout the year. This may go against some of your mindsets, but I do it for two reasons. First, I like to see that I don’t have any blatant errors on my account, like fraud, or a reporting error by my brokerage, etc. Second, I like to have an idea of our progress throughout the year so I’m not surprised (for the good or the bad) come January 1st when I do my final tally. I’d rather stay apprised of my situation all year rather than wait 365 days to figure out someone hacked my account on January 1st.

Not a fun fact – in 2020, the Federal Trade Commission (FTC) received 2.2 million reports of fraud. Ouch. Granted, all of these reports aren’t regarding the hacking of a bank account, but you get the point.

What I am checking

On or around January 1st of each year, I run through all of our finances and record the totals. Then I “gray out” the line on our spreadsheet so it can be visually evidenced as closed. The accounts I’m updating are retirement investment accounts, real estate holdings, kids college funds, brokerage accounts, savings accounts, mortgage balances, cash, etc. Once I’ve entered the final numbers for 2021, my end of year total will update and lock, and my chart will update with a new projected trend analysis for the future based on the updates I just made for the year.

This is a really cool planning tool that allows us to track our financial progress year-over-year. As we continue on our financial journey, we’ll be able to see exactly where we came from and where we are headed.

Why not just ignore the total picture?

Well, that’s a very good question. Honestly, plenty of people have blindly thrown money in a 401(k) or Roth IRA for years without ever checking the account and been very pleasantly surprised. On the same token, plenty of people have done this same thing and been very upset. Imagine if you chose a bond fund when you were 18 years old and didn’t realize that you were continuously feeding a 100% bond 0% stock allocation for years. Your balance would certainly be suffering and you probably wouldn’t be happy with yourself.

On the other hand, if you conduct an annual review of all your holdings, you can easily spot mistakes that could haunt you over the long-term. Remember what we say – Proper Planning Prevents Poor Performance! Plan ahead and stay ahead!

Financial neglect doesn’t work

According to Intuit, in 2019, 3 out of every 5 Americans have no idea how much money they spent last month. To compound on this, 31% of them wish that they had spent less than what they did. Yes, you read that right. People have no idea how much they spend in a given month, but want to spend less. How on earth can you accomplish that if you aren’t tracking your finances?

This survey highlights the fact that Americans are not as interested in their finances as they should be. It’s time to wake up and smell the benjamins!

Set goals for the future

The easiest way to be successful is to set clear goals that are realistically achievable. If you currently have $5 in your bank account, setting a goal to have $1MM by the end of the year may not be achievable. So instead, set a goal like “put $200 per month in a savings account”. Everyone has to start somewhere!

My favorite goal for everyone looks something like this: “take my annual raise and put 50% of it toward my 401(k) contribution”. Overtime, those 2-3% annual raises can add up to big money in the 401(k). At some point, presumably, you’ll reach the annual IRS limit for 401(k) contributions, which is $20,500 in 2022. This is a great goal for anyone!

Start the New Year off on the right foot

The good news for you – it’s the end of 2021 (Thank the Lord) and you have the opportunity to completely change your personal finances in 2022. You have the ability to change your spending, adjust your savings, measure the impacts of these actions, and assess your situation to find further improvements. What an awesome New Year’s resolution this could be? Or, you could buy a gym membership that you’ll ultimately end up not using which will further hinder your budget (I’m certainly not discouraging you from working out, but this is just the reality of using a New Year’s resolution to do it).


  • D.C. Poc

    D.C. joined the Marine Corps right out of high school. When he left active duty after 5 years of service, he quickly earned a bachelors degree and an MBA. He got his first private sector job at a modest salary and quickly worked his way up through promotions. Once he started making decent money ($38k at the time), he quickly realized he needed to learn how to save for his future. After nearly ten years of research and application, he wants to share his knowledge and financial best practices so more people can become Wealthy Idiots!


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