End the Year Financially Stronger with These Helpful Tips

by David Beigie

The end of the calendar year offers a variety of opportunities to adjust and help you move closer to achieving your long-term financial goals. Talk to a financial professional to see if the following approaches are right for you.

Re-assess your financial situation and goals

Until you know where you’re at, it’s difficult to know if you’re making progress toward getting closer to your ultimate financial destination. The close of the calendar year is a worthwhile time to pause and reassess where you’re at in your financial journey. Are you overspending? Is there money in your flexible spending account that needs to be used? Did you have a medical procedure that needs to take place before a new deductible period starts? There are lots of reasons to stop, take your financial pulse, then figure out if there are course corrections needed before the year ends.

Working with your financial advisor and tax professional before year-end can be critical to ensuring you’re taking advantage of everything that’s out there.  For instance, some may wish to convert a Traditional IRA (Individual Retirement Account) to a Roth IRA during a tax year where you’ve earned lower income. Potentially gifting money or increasing charitable contributions may also make sense to lower your income tax in the current year.

Although past years may have provided good returns, there could be positions in your portfolio that are trading at a loss.  Work with a financial advisor to identify these positions so you can potentially offset gains with losses in your portfolio. This can provide an opportunity to rebalance while minimizing the taxable gains you’ll have to pay.  

Look for gaps

While you’re assessing your financial position, don’t forget to check for gaps in your planning. As we travel down the bumpy road of life, it’s not unusual for the cords tying everything down to loosen up. Don’t let an unanticipated “pothole” lead to a jolt that causes your cargo to go flying. Many employers have an open enrollment period, making it an ideal time to review your insurance coverage and adjust so you’re buttoned up and prepared for life’s inevitable uncertainties. 

This is also a great time to check in on your other insurance products such as home, auto and life. Look at whether you’ve had significant life changes such as a marriage, new baby, or a divorce.  Improvements to your home or a major purchase such as a vehicle or a home are also important to consider. In these instances, schedule a meeting with your insurance rep to make sure you’re covered now and to help plan for future insurance costs.

Fill the bucket

As you’re toting your financial bucket, it’s easy to have things slosh around and end up losing “water” along the way. Make sure you stay refilled by topping off an emergency fund, increasing 401(k) contributions or adding funds into your Health Savings Account. As you approach the holidays and start thinking about giving to others, don’t forget to pay yourself first and plan for your future.

Updated 12-19-23