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Updated December 8, 2023

Year-End Financial Checklist: 9 Tips to Maximize Your Money

Year-End Financial Checklist: 9 Tips to Maximize Your Money

Year-End Financial Checklist: 9 Tips to Maximize Your Money

Mike Zaccardi, CFA, CMT

Mike Zaccardi, CFA, CMT

Personal Finance

It’s been a challenging year for consumers and investors. Inflation remains on the high side while volatility has rattled both the stock and bond markets. With year-end approaching, now is an ideal time to reassess how you stand financially. 

Chances are – if you are like so many Americans – you've been able to snag a few pay raises as the jobs market keeps humming along with a low unemployment rate and rising wages, even considering inflation. But it’s never easy to keep a constant balance between your savings situation and how much you should have in the markets. That’s made all the more challenging today given such high interest rates and sometimes-scary stock market moves. Alas, have no fear. Let’s run through 9 end-of-year investing and personal finance strategies you can get working on so that you start 2024 off with a bang.

A closeup of champagne glasses
  1. Rebalance Your Portfolio

The S&P 500 has posted decent returns so far on the year, despite its ups and downs. The bond market has suffered another lousy stretch, though. For young people, making major realignments between stocks and bonds isn’t usually needed since the latter slice is often a small part of an allocation.

What makes 2023 different is how attractive cash is. You can earn north of 5% in a high-yield savings portfolio, so if you have near- or intermediate-term goals, definitely consider taking advantage of such a high current rate when deciding on your rebalancing technique. Allio’s high-yield portfolios can be the right solution for your emergency fund, too.

  1. Sell Your Losers for Tax Savings

Savvy investors often take advantage of what’s known as “tax-loss selling.” While rebalancing means selling winners and buying losers to bring your overall allocation back to its target weights, tax-loss selling focuses on positions within taxable accounts that are down from where you bought them. 

The IRS allows individuals and married taxpayers to claim up to $3,000 per year in losses to reduce taxable income, thereby saving you when you go to file early next year. There are important rules regarding so-called “wash sales,” and you can learn more about them here.

  1. Diversify

Spreading your wealth across investment types is always a prudent play. Your year-end review should put into practice the age-old wisdom of not putting all your eggs in one basket. Maybe you landed a hot job at a tech company in the last year or two and were awarded significant stock-based compensation

Take measures to reduce that concentrated position. As a general rule, you should limit what you hold in your employer’s stock to avoid the double risk of possibly seeing your investment go down as your job turns less secure. 

  1. Optimize Your Employee Benefits

Speaking of your job, having a firm grasp of your benefits package is key, particularly as you get older, and life becomes more complex. If you moved, got married, had kids, bought a house, came down with a serious illness, or encountered any of so many other life changes, then reassessing your insurance coverage is a high priority. 

Also, more companies now offer additional perks to retain quality workers. Take a few minutes to read through the annual benefits booklet from the HR Department, and even consider sitting down with a knowledgeable professional in that group – you might be surprised by all that’s available to you and your family.

  1. Fine Tune Your 401(k), IRA, and HSA Contributions

So, there are some important dates to keep in mind when it comes to retirement investing. First, unless you are a small business owner, you have until December 31 to wrap up your employer-sponsored retirement plan contributions (I.e., your 401(k), 403(b), or 457(b) plan). Think about increasing your pre-tax contribution rate for the last few weeks if you want to reduce your taxable income. 

You might also be able to make after-tax Roth 401(k) contributions whereby you lock in today’s tax rate and avoid paying income tax on distributions years or decades down the line. As for your Individual Retirement Account (IRA)c or Health Savings Account (HSA), you actually have until Tax Day next year to make 2023 contributions. As you make tweaks to these accounts, take a minute to review the beneficiary designations, too.

  1. Give to Your Favorite Causes

November and December are busy months for most charitable organizations. It’s the most common time for people to cheerfully give (while also snatching a possible tax break). It may seem callous to think about the money side of it all, but one technique is to bunch together several years' worth of charitable donations, thereby increasing your total itemized deductions for one tax period. Additionally, if took on a mortgage in 2022 or earlier this year, then you may be paying enough mortgage interest to take your itemized deduction tally above the standard deduction amount.

Another strategy to consider is giving away highly appreciated stocks instead of cash. With this planning tactic, you not only earn a tax deduction but also avoid paying capital gains tax on the stocks or funds. You have until December 31 to make these qualified donations for tax purposes.

  1. Live a Little!

Was that a little too much tax info to take in? Maybe so. As the year comes to a close, it’s not always about the dollars and cents. Taking time to recoup after what may have been a stressful year sets you up for success in 2024. Burnout is real among millennials and Gen Zers. Anxiety continues to run at extremely high levels, according to study after study, so keeping a savings-fun balance – even if that means a bit extra spending – could prove to be the best investment of all. 

Research shows that some of the best ways to maximize happiness are to spend money on others and volunteer your time. Think about that now that the holidays are basically in full swing.

  1. Tackle Debt

Yes, we gave you permission to spend and have fun. We also trust that you will not rack up high-interest debt, as doing so may be more costly than ever. The average interest rate on credit card balances topped 20% recently. It’s another byproduct of the Federal Reserve’s war against inflation. What’s more, Americans, while we are collectively wealthy compared to history, hold more than $1 trillion of credit card debt. 

We encourage young people to use one of two ways to pay off what they owe: (1) the avalanche method, or (2) the snowball method. If you have federal student loans with a modest interest rate, don’t be super stressed about paying that down quickly. The same goes if you were able to lock in a mortgage rate under, say, 5%. In general, reducing what you owe relative to your available credit shores up your credit score, too.

  1. Increase Your Take-Home Pay

Did you know, the average tax refund is more than $3,000, according to the IRS? That’s YOUR money. If you are one of the millions of Americans who look forward to a fat refund each April, think about what that could be costing you. 

A big refund is like an interest-free loan you extend to our government overlords. You can adjust how much of your paycheck is withheld for federal income tax liability, which may increase your net pay. Once again, it is your responsibility to be smart with your cash.

The Bottom Line

It might feel overwhelming to think about all you should do before a new year starts. Allio makes it easy with your investments. You can build wealth with the help of our finance experts. By tuning up your overall money situation using these tips, you can confidently close out the year and step into the new one with a stronger financial foundation.

Whether you want help saving money for a short-term goal (like a down payment), or investing for the future, Allio can help. Head to the app store and download Allio today!


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