Disclaimer: I am not a financial advisor, accountant, or tax expert, nor do I claim to be. The information in this post is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation. This is purely my own experience trying to learn personal finance and build a better future.
As the year winds down, it's the perfect time to make those last-minute financial moves to secure your future and ensure a smooth start to the new year. Let's dive into some savvy strategies I’m leveraging to make the most of your year-end finances.
🌟 Max Out Contributions
Maximize Social Security: If you've reached the annual limit for Social Security contributions, congratulations! This means your taxes have dropped slightly, leaving you with more income to manage. Of course, I’d encourage you to supercharge your saving instead of sinking it into consumption.
Boost 401(k) Contributions: Take advantage of your employer's 401(k) plan by increasing your contributions. Aim for those yearly limits. Personally, I had to ramp things up late in the year to hit $22,500, but I balanced out the hit on the paycheck by using pre-tax contributions. Instead of 100% Roth, I switched to 50/50.
👓 Eye on Health
Schedule Doctor Visits: Don't neglect your health. Schedule a visit to the eye doctor or dentist to ensure you’re in top shape. It's an investment in your well-being, especially if you haven’t used a benefit that will expire year end. Don’t miss out on a free new pair of frames.
Revisit HSA Strategy: With open enrollment around the corner, reassess your Health Savings Account (HSA) strategy. Consider increasing contributions for medical expenses and long-term savings. Also, weigh the pros and cons of switching plans. Maybe you need to go with PPO next year or can finally open the HSA. The only way to know is to crunch the numbies.
I get to increase my contributions next year since my partner and I will both be on my health insurance. Can’t beat that sweet, sweet triple-tax advantage.
💼 Tax-Savvy Moves
Tax Loss Harvesting: Explore opportunities for tax loss harvesting. Offset capital gains by selling underperforming investments to reduce your tax liability.
🚀 Other Recommendations
Emergency Fund: Ensure your emergency fund is well-padded. With a look back on your earnings from this year, do you have ~6 months expenses on hand?
Review Investment Portfolio: Reevaluate your investment portfolio. Consider rebalancing to align with your risk tolerance and long-term objectives. Now is a good time to take a step back and get a good look.
Charitable Giving: Give back during the holiday season. Consider donating to your favorite charities and possibly benefit from tax deductions.
Financial Goals: Reflect on your financial goals. Are they on track? Adjust your budget and strategies to get closer to your aspirations. Get ready for your yearly net worth statement and make some more aggressive financial goals in the new year.
This year-end financial checklist will help you make the most of your money while preparing for a successful financial future. Cheers to a prosperous new year!