The end of the year is an ideal time to reflect on your finances — what went well over the past year and what didn’t — and to start thinking about goals for the next year. It’s also a good time to make sure you’ve accounted for any major life changes that occurred over the past year that could affect your finances and to be mindful of any year-end deadlines.
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In this “Financially Savvy Female” column, we’re chatting with Samantha Garcia, wealth advisor at Halbert Hargrove, and Vanessa N. Martinez, wealth management professional and CEO of Em-Powered Network, about the money moves every woman should make before the end of 2022.
Check In on Where You Currently Stand
Now is the time to check in on any financial goals you set at the beginning of the year.
“One goal that people should be checking in with themselves on is budgeting and spending,” Garcia said. “Did you set a goal to stay within a certain budget? How did your spending line up with what you thought?”
You should also review any savings goals you set.
Garcia recommends asking yourself: “How much were you able to save throughout the year? Is it what you had hoped at the beginning of the year? Is there anything you can do differently next year?”
“The next one is investing goals,” she said. “Are you contributing to a 401(k)? If not, are you contributing to an IRA? Are you putting your money to work in a way that’s earning more than the interest rate at your bank?”
Checking in on where you stand can give you a clear picture of where you may need to course correct for the coming year.
“Give yourself grace and be honest,” Martinez said. “There might be goals that you haven’t met, which can build stress, so instead of facing them, we might hide and ignore them. If you give yourself grace, it will allow you to try again. If you did meet your goals, don’t forget to celebrate! Either way, be honest with yourself — can you save more, invest more and increase your goals, or should you decrease those amounts? Making adjustments goes both ways.”
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Make Sure All of Your Financial Accounts Are Up-to-Date
If you’ve had a life change over the past year, such as a marriage, divorce or having a child, make sure this is reflected on all of your accounts.
“This is a great time of year to check in and make sure your t’s are crossed and your i’s are dotted for retirement plans and for any accounts that have a beneficiary,” Garcia said. “Make sure your beneficiaries are up-to-date. This has been a wild year in the markets and for a lot of people personally, so making sure things are up-to-date is a really important thing.”
You should also check in on your current insurance coverage, Garcia said. “Have there been any life changes or are there changes coming next year?”
Meet Year-End Deadlines
Be mindful that the end of the year is the deadline for maximum retirement contributions, as well as for certain money moves that will have tax implications for the 2022 tax year.
“Look to fully contribute to your 401(k), which [has a maximum limit of] $20,500 for 2022,” Martinez said. “Review what you have contributed so far, and increase your percentage for the month of December to max out your plan.”
When it comes to tax moves, “any charitable donations you would like to make should be completed by end of the year to earn your tax deduction for 2022,” Martinez said. “You can give up to the annual exclusion amount ($16,000 in 2022) to any number of people every year, without facing any gift taxes or filing a gift tax return.”
You might also want to start setting money aside for IRA contributions.
“Do some advanced planning for contributions to your IRA or Roth IRA, even though that deadline is April 18, 2023,” Martinez said. “You can prepare to have your amount ready.”
Double Check That You’re Making the Most of Your Money
“It’s really important to make sure your money is working for you, whether it’s saving or investing,” Garcia said. “Make sure that your savings account isn’t just earning 0.01% anymore because there are so many options that are paying [more]. And make sure that your investment allocation is still up-to date-with the appropriate mix for you. It’s been a wild market year, but it’s really important to check on your allocations and make sure they’re still appropriate for where you’re at.”
Start Setting Goals for the New Year
“It’s never too early to start setting the goals that you’re going to have for 2023,” Garcia said. “Set big picture goals, but then also break them down so that it’s not just this big overwhelming goal for the year. Break it down into quarterly goals or monthly goals. If you don’t break it down into those smaller numbers, you could get to Dec. 15 and realize you didn’t save anything this year.”
Garcia recommends setting goals related to budgeting, saving, building an emergency reserve and investing for the future. To make sure you actually stick with your financial goals in the coming year, Garcia advises writing them down and posting them somewhere you will see them on a regular basis.
“Writing them down and putting them in a place where you’re going to see them every day is a really good way to keep yourself accountable,” Garcia said.
She also recommends enlisting an accountability partner to help you stay on track with your goals for the coming year.
“It’s really good to have somebody who is going to be like, ‘Hey, how are you doing on that goal?'” Garcia said. “Have somebody who can ask those questions, who you trust, who can help keep you on track.”
GOBankingRates wants to empower women to take control of their finances. According to the latest stats, women hold $72 billion in private wealth — but fewer women than men consider themselves to be in “good” or “excellent” financial shape. Women are less likely to be investing and are more likely to have debt, and women are still being paid less than men overall. Our “Financially Savvy Female” column will explore the reasons behind these inequities and provide solutions to change them. We believe financial equality begins with financial literacy, so we’re providing tools and tips for women, by women to take control of their money and help them live a richer life.
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This article originally appeared on GOBankingRates.com: 5 Money Moves Every Woman Should Make Before the End of 2022