5 tasks to be completed before December 31

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  • The last few months of the year are a good time to check your finances.
  • Your expenses tend to shift over time, so be sure to consider these changes by updating your budget.
  • With the help of a financial advisor, rebalance your investment portfolio and consider tax saving strategies.

Every year when the summer heat begins to cool off and the color of the leaves begins to change, it is a sign that we are approaching the end of the calendar year. It should also be a reminder to check your finances, with major deadlines approaching that could have an impact on your finances.

We spoke with financial professionals to compile a list of some of the most important things that should be on your year-end financial to-do list. Look at them below, arranged from least time intensive — tasks that can be done in 10 minutes or less — to items that may require counseling and careful calculation.

1. Update recipients and passwords

Anytime there is a change in your family such as the loss of a family member, marriage, divorce, or birth, you should consider adjusting the beneficiaries in each of your accounts. The beneficiary is the person (or persons) who will receive the money upon your death.

Beneficiaries of your retirement accounts can be updated like 401(k)And the Irish Republican Army, as well as life insurance. But in some cases, you can add a beneficiary to your checking and savings accounts as well.

Doug Carey, Chartered Financial Analyst (CFA) and owner and president of WealthTrace, a software company for retirement and financial planning. By not updating your beneficiaries, you risk transferring your assets to an unintended recipient.

“Don’t assume you have will It covers all of this too, because a lot of times you’ll miss what happens to some accounts if you die,” adds Carey.

In addition to updating your payees, consider updating your passwords for each of your financial accounts. As the world becomes increasingly digital, financial security blends with online security. A password manager can help with the process as most of them have a feature to create and save complex passwords for you, alerting you if you’ve used the same password across multiple sites.

2. Review your tax deductions

If you have some major changes during the year, it might be a good time to check your tax deduction and update Form W-4. For example, a change in marital status or dependents can affect the amount of money taken from each paycheck.

Says Kamari Ellis, Registered Agent and Founder Philly Tax Team. If your withholdings are too high, you’ll end up paying a lot of taxes and therefore your smaller paycheck—but you get a refund at tax time. If the withholdings are too low, your paycheck will be higher but you may end up in debt to the IRS. “This tax debt often causes undue stress and anxiety on taxpayers,” Ellis adds.

3. Maximum retirement accounts and HSA

Maximizing the contributions to your retirement accounts has both long- and short-term implications.

In the short term, you may be able to lower your taxable income when you contribute to accounts like health savings account (HSA) if you have a high-deductible health insurance plan, a 401(k), or a traditional IRA.

“If you can’t contribute as much, at least make sure you get the company match,” Carey says. “If you’re not taking advantage of the company match, you’re leaving money on the table.”

Wealth Front Wealth Front Air

expenses

0.25% 0.06 – 0.13% for Low Cost Mutual Funds

Account types

Conventional IRAs, Roth IRAs, and SEP IRAs

Investment types

ETFs, Index Funds, and Crypto Trust Funds

Wealth Front Wealth Front Air

expenses

0.25% 0.06 – 0.13% for Low Cost Mutual Funds

Account types

Conventional IRAs, Roth IRAs, and SEP IRAs

Investment types

ETFs, Index Funds, and Crypto Trust Funds

expenses

0.25% 0.06 – 0.13% for Low Cost Mutual Funds

Account types

Conventional IRAs, Roth IRAs, and SEP IRAs

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4. Adjust your budget for inflation

The end of the year is a good time to evaluate your budget and make adjustments to any expenses that may change over time. for example, Insurance rates for your carAnd the costs of groceries, subscriptions for streaming services, and utilities tend to rise year by year, especially when inflation High. If you don’t account for these, you may not have the most accurate picture of where your money is going.

There are many apps that offer features to easily see what you’ve spent and how those expenses have changed over the course of the year. “Completing an exercise like this can help you realize how much you are actually spending and set you up for success for the new year,” says Connor Spiro, a CFP® professional and senior financial advisor at John Hancock’s advice.

Not noticing these subtle changes in your income and expenses may result in you spending more than you intended or offsetting these higher expenses by contributing less to your long-term savings and retirement goals.

5. Rebalance your portfolio and employ tax loss harvest

rebalancing Your portfolio on a regular basis is an important part of managing your risk as an investor. Rebalancing is the process of adjusting your portfolio holdings to the intended allocation.

For example, at the beginning of the year you may have invested 80% of your portfolio in stocks and 20% in bonds. As the year progresses and the market moves, the value of your assets may have turned into 65% stocks and 35% bonds. Rebalancing will return you to your target allocation 80% equity and 20% bond.

“Before making any adjustment, also consider the investment time horizon and risk tolerance. Have these changed since the beginning of the year? If so, you may want to rebalance your portfolio to a slightly different asset mix to account for these changes,” Spiro says.

In some cases, rebalancing requires selling assets to reallocate in other areas or contributing more to your investment account to make up the difference. If you’re selling parts of your portfolio to rebalance, pay close attention to the type of account, as this may be a taxable event if it’s a non-retirement account. If you sell at a loss before the end of the year, you may be able to compensate capital gains In a process known as tax loss harvesting.

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