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Your Year-End Financial Checklist
As we approach the end of this year, it's important to take stock of your finances and make any necessary adjustments to ensure you’re on track and ready for the new year. If you’re not sure where to start, here are action steps you can take to help make this your best year yet:
- Get Control of Your Spending- This typically starts with setting goals, such as saving a certain amount each month or paying down debt, and then prioritizing your spending around those goals.
- Create a Cybersecurity Plan to Protect Your Finances- You are your first line of defense when protecting your finances against identity theft and cyber fraud. Understanding these 3 things can help: (1) fortify your computer’s firewall by updating your operating system, (2) understand your financial vulnerabilities, and (3) review and diversify your current passwords.
- Rebalance Your 401(k)- If you allocated your money among stock and bond accounts for a lower-risk, balanced approach to investing, the stock gains might have upset the balance. For instance, if your original allocation was 60% stocks and 40% bonds, an increase in stock prices may have shifted the allocation to 70/30 or 80/20. When that happens, it could introduce more risk into your account when stock prices decline. This is why it can be essential to always maintain your initial target allocation.
- Top Off Your 401(k) or IRA- Your qualified retirement plan may be your best investment—both for the current reduction in income taxes and the ability to compound your earnings over time, free of taxes until withdrawal.
- Spend Down Your Flexible Spending Account- With a flexible spending account (FSA), you have until the end of the plan year to spend the money in your account. You can spend the money on most medical expenses, including copayments and deductibles, but not on insurance premiums.
- Go Tax-Loss Harvesting- If you have a taxable brokerage account, you might consider selling your losses to offset any taxable gains realized during the year. Your losses can offset those gains dollar for dollar.
- Re-Calculate Your Withholdings- The Treasury Department and IRS are always changing how much income tax is withheld from your paycheck. It’s essential to do a thorough review of your taxes in light of new withholding tables to ensure you have the right amount of your pay withheld for taxes.
*Seek advice from an independent financial advisor if you have any questions or doubts. Our content is for informational purposes only and is not intended as legal, tax or financial advice.
For more information on how to your end-of-year financial checklist, access the full article here.
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