4 Financial Moves to Make Before the End of the Year
Our experts answer readers’ investing questions and write unbiased product reviews (here’s how we assess investing products). Paid non-client promotion: In some cases, we receive a commission from our partners. Our opinions are always our own.There are only three months left in 2023, and many are already thinking about what next year will look like. You might be thinking about moving into a new place, switching careers, taking a trip, or even getting out of debt.No matter what your goals are, having your finances in order will help you make them happen.Before you ring in the new year, take some time to assess your financial situation and prepare for 2024.Here are four financial moves you can make before the end of the year:401(k)s operate on a calendar-year schedule, so the last day to make those contributions is December 31. As a reminder, the maximum contribution is $22,500 (If you are 50 or older, it is $30,000).While you’re taking care of your 401(k) contribution, go ahead and set your deferrals for next year as well.If applicable, plan for your IRA contribution. You have until April 15, 2024 to contribute to your individual retirement account for 2023. The maximum you can contribute is $6,500 ($7,500 if you are 50 or older). Once you have your retirement house in order, you can move on to the next step.This is a great time to do a comprehensive insurance review. Has anything happened this year to impact your health insurance? Will anything transpire next year? Do you need to increase coverage in any area? Make sure you have adequate insurance coverage now.If you have health insurance through an employer, open enrollment may be happening right now. I plan to review my health and medical coverage to see if any changes need to be made this year.I sit down at this time every year and pull all three credit reports (Experian, Equifax, and TransUnion) and I read through the paper statements for all of my bank accounts.You are entitled to a free credit report every year from each of the three credit bureaus and can access this by going to AnnualCreditReport.com. Once you have your credit reports, assess where you are with your credit — are you where you want to be or could you do a little work to improve your score?On-time payments and credit utilization are two major factors that determine your credit score. If you want to improve your score, make a plan for the new year, pay down debt, and make all payments on time.Many people would prefer to avoid thinking about tax season until the deadline on April 15. But by then it’s too late to do anything that might reduce your tax bill.Take a look now at where you stand with your taxes. Are you going to take the standardized deduction, or will you be able to itemize your deductions? The standardized deduction for 2023 is $13,850 for single filers and $27,700 for married, joint filers.Some taxpayers will be able to obtain even bigger deductions by adding up certain allowable expenses, known as itemized deductions. These include mortgage interest, out-of-pocket medical expenses, state and local taxes, property taxes, and charitable donations to tax-exempt charities.If you fall into the category of taxpayer who can itemize, start gathering those documents now. Make your charitable donations by December 31 to help lower your tax bill.2023 is quickly coming to a close. Use these simple financial moves to be ready for next year.
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