8 Smart Money Moves To Make Before the End of the Year, According to Experts

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For those who still feel lucky just to have gotten through 2020 in one piece, it might be hard to believe that 2021 is just about over — yet here we are in December. That gives you just enough time to do some financial housekeeping before the clock strikes 12 on New Year’s Eve. Here’s a look at the money moves that the experts want you to make before the calendar changes.

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Start Fresh, Set New Goals and Make a Plan

It’s resolution season — but those rarely last. Instead of making lofty self-promises that probably won’t come to fruition, turn over a new financial leaf for 2022 with a plan based on realistic goals.

“Before the year is over, I would highly encourage individuals to take time to set actionable financial goals for themselves for the new year,” said Brad Cummins, owner of Insurance Geeks. “So many people tend to wait until the new year begins to start setting goals, but the earlier, the better. Make sure to be very specific about your financial goals and even set a deadline for yourself so you can keep yourself accountable. Write those goals down, whether in list form, on a vision board, or record them in a journal, and make sure to remind yourself of these goals throughout the year.”

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Make a Plan for Any Year-End Windfalls

One of the saddest stories to come out of the pandemic was the huge number of people who squandered their stimulus payments — which could have been life-changing money — on unplanned overspending. If you have a bonus or some other stash of cash coming your way at the end of the year, avoid making that same mistake by planning ahead now.

“Instead of rushing to spend your bonus or incentive on a new gadget, bag, or clothes, click the ‘transfer money’ button on your online banking app” and send it straight into a savings or investment vehicle, said James Parsons, a businessman, financial expert and the CEO of Content Powered. “The less you have access to your money through online channels, the lower the risk of spending it, and the higher you increase your wealth.”

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Check Your Credit

If you’re planning to borrow money or make a big purchase in 2022 — or even if you’re not — revisit your credit report, see where you stand and check for errors.

“Check your credit reports if you’ve not done so within the past year,” said Sean Fox, president of Freedom Debt Relief in San Mateo, California. Credit reports are free, once a year, from each of the major credit reporting agencies — Experian, TransUnion, and Equifax. Visit AnnualCreditReport.com, then review the reports carefully. If you find any errors, correct them by following the directions on each agency’s website.”

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Consider Cutting Investment Losses to Minimize Taxes on Capital Gains

Greg Wilson, chartered financial analyst and co-owner of ChaChingQueen.com, said that now is the time to look at any securities you have in taxable accounts. 

“If you notice that any have unrealized losses, talk to your financial advisor about tax-loss harvesting,” Wilson said.

He refers to the strategy of intentionally selling securities at a loss to offset capital gains taxes you owe on any winners you sold during the year. Wilson is right on one thing — that’s definitely something you want to run past a financial pro first.

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Give Your Bank an Annual Performance Review

Sofía Ramírez, a senior advisor at the personal finance platform Tend, suggests holding your bank’s feet to the fire before the year runs out.

“Ask yourself,” Ramírez said, “is your financial provider on your side? Are they completely transparent? Do they provide access to tools to help improve your financial literacy and make better, more informed decisions? Do they care about collaboration? Do they offer you the rewards you deserve? If you answered no to one or more of those questions, then it may be time for a switch to another banking service that offers more personalized attention to your finances and goals.”

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If You Don’t Have a Retirement Account, Open One Now

If you’re not saving for retirement, the single best thing you can do is open a tax-advantaged account and stuff as much money into it as legally possible before New Year’s Day. Not only will you start building a nest egg, but you very well might lower your 2021 tax bill.

“When you put money into an investment vehicle like an IRA or 401k before December 31st, that contribution will reduce your taxable income for the final tallies in January,” said Jonathan Svensson, co-founder of the financial education website Almvest.

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If Your Already Have One, Max Out Your Contributions (or Do the Best You Can)

If you have been kicking money into a retirement fund, you’re on the right track. But the key is to max out your contributions — or at least to come as close as you can.
“If you make contributions every month, you may not think to do anything extra at the end of the year,” said Olivia Tan, a Florida-based personal finance coach and the co-founder of CocoFax. “However, the more money you can contribute, the better.”

The same goes for HSAs.

“If you have a health savings account, make sure that you’ve contributed the maximum amount that you’re allowed to before the year’s end,” said Zach Reece, owner and COO of Colony Roofers in Atlanta and a CPA who was formerly employed by Deloitte. “If you have an eligible health insurance plan and an HSA, contributions to your HSA are tax-deductible.”

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Plan For Next Year’s Contributions Now

Once you’re done playing catch up with this year’s tax-advantaged accounts, plan for how you’ll build your savings starting in January so you don’t find yourself in the same position at the end of 2022.

“Time to start thinking about how you can maximize your contributions for the next year,” said Francis Locknear, founder and CEO of TheCostGuys.com, a financial education site. “Remember that each year, your contributions will increase. You may need to evenly spread out your contributions all year and adjust your monthly contributions once January rolls in. Determine how much you need to contribute every month beforehand.”

If your paycheck was too small this year and your refund was too large, now is the time to think about tax allowances, too.

“Make sure that you know how much you need to withhold for taxes from your pay,” Locknear said. “Take a look at your current tax allowances to help you break even during tax time. It will let you avoid any confusion and frustration once tax time rolls around.”

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About the Author

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for TheStreet.com, a financial publication in the heart of Wall Street's investment community in New York City.

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