January will be upon us soon, so it's time to collect key financial data to prevent any last-minute scrambles as the New Year approaches.

If you feel like the year just flew by, you're not alone. While days can feel long, years pass quickly. Now's the perfect moment to reflect on your financial journey and set your goals. Collecting data from the past year can provide a clear picture of where you stand and help you prepare for the upcoming year.

Gathering your financial data ahead of time minimizes the stress many experience when they wait until the last moment, says a certified financial education instructor. “Having your financial information ready before the New Year can significantly reduce the likelihood of late tax filing, which could lead to extra charges or fees,” she adds.

This proactive approach also gives you a chance to evaluate your aspirations and make informed financial choices. Here’s what you should compile before the year wraps up to avoid any panic in early April.

Review Your Flexible Spending Account

If you have a flexible spending account through your employer, keep in mind the “use it or lose it” rule. Policies may have changed due to the pandemic, so check with your employer about the current guidelines, suggests a financial expert. “Recent government measures might allow employees to roll over unused FSA funds into 2022, but this depends on your employer's decision,” he notes. “If your funds can’t roll over, make sure to spend them to avoid losing that money.”

Get Your Tax Documents Ready

While taxes may not be on your mind just yet, tackling this task early simplifies the filing process. Experts recommend getting your documents to accountants as soon as possible, as they tend to be swamped in the spring.

“Collecting your tax documents before year-end is essential, as this can be the most time-consuming step, given the amount of information involved,” she explains.

The common tax forms you’ll need for a smooth filing include:

  • Wage statements like W-2s or unemployment records.
  • Personal info for all filers, including social security numbers.
  • Government-issued photo identification.
  • Last year’s tax returns.
  • Records of charitable donations.
  • Childcare or educational expenses.
  • Detailed medical expenses.

Check Your Retirement Accounts

Now is a great opportunity to assess your retirement accounts as you plan for future financial success. Take a look at your 401(k), IRA, or other retirement accounts to see if you can make additional contributions, keeping the limits in mind.

If you're under 50, you can contribute up to $19,500 annually to your 401(k). If you're 50 or older, you can take advantage of catch-up contributions, allowing you to set aside up to $26,000 each year. For IRAs, the contribution limit is $6,000, or $7,000 if you're 50 or older.

Evaluate Your Bank Statements and Credit Reports

If you're struggling to meet your savings targets, it may be time to examine your spending habits. Many neglect to regularly review their bank statements, which can provide valuable insight. “Having your bank statement data at hand helps you create an effective budget for the upcoming year and kickstart your financial journey,” a financial educator suggests. Consider this task in a comfortable setting, perhaps with a cup of tea or a glass of wine, as you identify spending patterns and areas for improvement.

While reviewing, pull your credit reports from the major agencies before the end of April. “Even if you don’t check your credit weekly, year-end is a great reminder to look for errors,” he advises. “Ensure all the details are correct and devise a plan to manage your debt.”

Assess Your Goals and Achievements

Lastly, it’s crucial to revisit your savings goals and confirm your emergency fund is in good shape. Take time to reflect on your objectives and adjust them based on your current circumstances. “If your goals have shifted over the past year, adapt your savings strategy accordingly. Perhaps instead of a high-end TV, a vacation now seems more appealing,” he suggests. “Whatever your priorities, ensure your savings plan aligns with your aspirations and tweak your approach as needed.”