As the end of the year approaches, and the trajectory of our lives seems to speed up towards the holidays, it’s a good idea to take a moment and consider your financial situation. Getting your finances in order before the year ends can provide peace of mind, positioning you for a smooth segue into the new year. Whether you want to pay off debt, save more for retirement, or simply create an updated budget to help achieve your financial goals, now is an ideal time to take action.
Take stock of your Essential Expenses
Start by assessing your current fiscal standing. Gather your bank statements and credit card bills, and have a closer look at your income, expenses, and debts. Identify areas for improvement that will help you create a budget that aligns with your financial objectives. Consider all your essential expenses when planning next year’s budget, including (but not limited to): rent or mortgage payments, groceries, insurance, car payments or commuting expenses, and gas, electric, and cable bills. Compare this year’s spending against your proposed budget and make adjustments where they are necessary.
If you expect to earn more money next year, you might want to consider allocating some of that increased income to a savings account, especially if you’re putting funds aside for something specific, like college tuition or retirement.
Optimize Your Retirement Savings
If you're not yet retired, go over your contributions to IRAs and other retirement accounts. Check your asset allocation, and do so if you need to make changes. If you or your spouse are older than 72, you must remember that Required Minimum Distributions (RMDs) have to be taken before December 31, or you could risk incurring an additional penalty tax. If you need clarification of the rules and regulations, consult your tax professional or visit the IRS website.
Don't Miss Out on Year-End Tax Benefits
Consider taking advantage of any available tax benefits before the year ends. Review your investments and eligible deductions to maximize your tax savings. Consult with a tax professional to ensure you are taking advantage of every available opportunity. Make any substantial charitable contributions before the end of the year if you want to be able to claim them as a deduction on your 2023 tax return.
The end of the year is a good time to declutter your financials and lifestyle by canceling unnecessary subscriptions or memberships you no longer use. You might be surprised how much money can be freed up and used for other things such as your next summer vacation.
By getting your finances in order before year’s end, you are setting yourself up for a prosperous 2024. Take the time to assess your financial situation, create a budget, and declutter expenses. Financial wellness is an achievable goal and regular end-of-year assessments will help keep you on your way to a clearer financial future.
If you’d like some help with financial and tax planning strategies, give us a call. The team at Myrick CPA is here to help you achieve your personal goals for years to come.
