As the year draws to a close, it’s crucial to take a step back and assess your financial health. A year-end financial checkup can help ensure you’re on track for your short-term goals and long-term aspirations. Here’s what you need to consider for your money as 2023 winds down.
1. Review Your Budget
Your budget is the cornerstone of your financial plan. Have your income or expenses changed? Perhaps you’ve gotten a raise, or your rent has increased. Update your budget to reflect these changes. If you’ve strayed from your budget, now’s the time to get back on track. Look for areas where you can cut back on spending and redirect that money toward savings or paying off debt.
2. Examine Your Savings
Emergency fund, vacation, retirement–savings come in many forms. Check the balances of your savings accounts. Are you meeting your goals? If not, consider what you can do to boost your savings. If you’re off track with savings, you might still have time to max out your IRA contributions before the tax deadline.
3. Evaluate Your Debts
Make a list of your debts, including credit cards, student loans, and mortgages. Note the interest rates and any upcoming changes to those rates. If you have high-interest debt, think about strategies to pay it down quickly, like making extra payments or transferring balances to a lower-interest credit card.
4. Maximize Retirement Contributions
If you have a retirement account like a 401(k) or IRA, make sure you’re contributing enough to get any employer match. This is free money you don’t want to miss out on. Also, check to see if you’re on pace to max out your contributions for the year. Contributing more can lower your taxable income and boost your savings for the future.
5. Check Your Credit Report
Your credit score affects your ability to get loans and impacts interest rates. Order a free credit report from the three major credit bureaus to check for errors and unrecognized activity. If you find mistakes, dispute them. Taking action now can save you a lot of headaches and money down the line.
6. Plan for Taxes
The end of the year is your last chance to make moves that can change your tax bill. If you’ve had a high income this year, you might want to increase charitable donations or business expenses (if applicable) to reduce taxable income. If you’re self-employed or have a variable income, make sure you’ve paid enough in estimated taxes to avoid penalties.
7. Adjust Insurance Coverage
Life changes–like a new home, new job, or new family member–might mean you need more or less insurance. Review your policies to ensure they match your current needs. Sometimes, bundling services or increasing your deductible can lower premiums.
8. Prepare for Next Year
Set financial goals for the coming year. Maybe you want to save for a down payment on a house or start investing. Now is the time to outline your strategy so you can hit the ground running in January.
A year-end financial checkup might seem daunting, but it’s a necessary step to secure your financial future. By tackling these areas now, you can enter the new year with a clear picture of your finances and a solid plan to keep your money working for you.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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