Top 10 End-of-Year Financial To-Do’s

Top 10 End-of-Year Financial To-Do’s

Every year I write a similar blog with end-of-year planning tips, tricks, and ideas to help you get your financial house in order.  I have found it serves as a great reminder or catalyst to get those end-of-year little items checked off.  So, in the spirit of holiday tradition, I give you 2023’s End of Year list.

1. Max out retirement accounts– Regardless of where you work you should almost always have some form of retirement plan available to you.  Whether it be company-sponsored or even self-administered there are always options.  As a company where one of our main focuses/specialties is retirement planning, I’ll lead with this tip.  Check your annual limits (401(k) is $22,500 with a $7,500 catch-up) and if able try to get every last bit in before year-end.  It may take you changing some deferrals for your last few checks.  That said remember these dollars go in tax deducted and have massive compounding effects. 
2. Roth Conversions– Now this strategy is certainly not for everyone, or even most.  However, for those who are considering, it makes sense you have until 12/31 when the clock strikes midnight before you turn back into a pumpkin.  Sorry got carried away with all the kid movies.  What I was trying to say is now is a great time to review where you stand on taxes and calibrate if a Roth conversion makes sense for you.
3. H.S.A– When will this guy shut up about H.S.A accounts?  Never!  They are basically the best accounts out there and the only one to my knowledge that offers triple tax benefits.  Two suggestions when it comes to end-of-year planning.  First, make sure you hit your allowable maximum for the year.  Second, if you have plenty of excess dollars building up in there go invest it in the investment arm of your H.S.A account.  There now I’m done talking about this little manna from heaven.
4. F.S.A– The little brother to the H.S.A. accounts is the Flexible Saving Account.  It is extraordinarily important to make sure you use these funds before the year-end.  Unlike the H.S.A accounts these funds must be used by year end.  If you don’t have any medical stuff planned go treat yourself to a nice new pair of glasses or get those teeth stained nice and white.  The point is to use it or lose it, and I’ll always be in the camp of using it.
5. RMD– If you are RMD eligible 72 or 73, depending on your birth year, it is critically important to make sure you take your retirement account Required Minimum Distributions before year-end.  There is a nasty penalty if you forget to take it and even if you don’t “need” the funds we can always reinvest them in a non-retirement account.
6. Tax Plan– No time like the present to make sure your tax plan is up to snuff.  Did you make your final estimated tax payments?  Were there surprise income situations this year where you must recalibrate your tax situation to make sure you don’t owe too much or get a penalty?  In any instance, there are likely a handful of reasons to do some proactive tax planning. 
7. Charitable Contributions– There is still time left to make those charitable contributions before year-end.  Remember, you can charge and pay in the new year, postmark a check by 12/31, or even transfer stocks to a Donor Advised Fund all before the year ends.  This all will credit your 2023 taxes regardless of when the funds are cashed or you pay your cc bill.  If you are looking for a great charity George Costanza is a big fan of the Human Fund (for you Seinfeld nerds like me).
8. New Year Adjustments– The end of the year also gives you a great ability to make some adjustments, or shall I say increases, to your investment savings.  Even if you simply increase your 401(k) by 1% or another $100/mo to your investment account it will make a huge difference.  With the year winding down and hopefully some reprieve from work what better time than now to set yourself up for the New Year? 
9. Financial Review– This is a good time of year to make sure your investments are aligned with your goals.  It is also a great time to update your financial plan for what to expect in the future.  Review everything from your investments down to your insurance.  Again, take an hour or two to make sure you have all your ducks in a row before the New Year sweeps us away and I am writing this same blog again for the 10^th year in a row!
10. Budget– Last but not least, what a good time of year to review your expenses for 2023 and set a budget for 2024.  Did you spend too much on certain categories?  Are you living too close to the edge and need to set aside more money for retirement or emergency?  In any event, setting a budget for the New Year is a great way to be financially aware of where your hard-earned money is actually going.

There you have it, my top ten end-of-year items to get your financial house in order.  The good news is you don’t have to do it alone, as Diversified, LLC, and Diversified Tax are here to support you in not only your finances but also in achieving your life goals.

Stay wealthy, healthy, and happy everyone.  I’m grateful for you all!