6 Steps to Higher Net Worth: A Year-End Financial Checklist

If you want to create momentum for your New Years’ money resolutions, put some financial improvements in motion before the end.

Here are six easy-to-implement steps to help boost your net worth going into the new year.

1. Mind your health insurance deductibles

End-of-the-year financial planning strategies aren’t always this well-timed: “My son’s birthday is December 29th. Stacia Williams says that his due date was January 2. “I begged my OB/GYN for permission to induce me. “

She knew her due date was close enough that the doctor could be flexible. She also knew that her insurance deductible would reset Jan. 1. This meant she would have to pay out-of-pocket as she started meeting the new year’s minimum.

“That saved us a ton of money,” Williams says. He was my most expensive child! “

Williams is a founder of and a wealth advisor with the Williams Financial Group in Kansas City, Missouri, so she knows about such things. Let’s say you have met or neared your annual deductible. You might consider scheduling expensive medical procedures prior to the start of the new year. Your deductible will reset and your out-of pocket expenses may increase.

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2. Use or lose your FSA balance

Being smart about your money often begins with employer-sponsored retirement, insurance and health benefit programs, says Marc Scudillo, a CPA and certified financial planner with EisnerAmper Wealth Management in Iselin, New Jersey.

He says many early-career workers have high-deductible health insurance plans combined with some type of tax-advantaged health savings account, such as a flexible spending account.

Many of these employer-sponsored health savings accounts are “use it or lose it,” Scudillo says. You may lose any balances that remain in your account after one year. You may be able to roll over a part, or all of your balance, into the next year, depending on which account you have.

Either way, you’ll want to review that balance and your options before you end up having neither.

3. Plan holiday spending

Williams says budgeting for holiday expenses is a must so that you are confident you’re spending disposable income and not dipping into money needed to cover the necessities. You can make it as complex or as simple as you like, from a spreadsheet to an app which tracks your spending .

She is also a fan of cash-back rewards and interest-free credit card promotions to help pay for holiday expenses (“it’s almost like layaway”). Be sure to calculate the amount due in order to be certain you can make the payments on time. And keep an eye on your credit limits; having more than 30% of a card’s limit in use can start to hurt your credit score. Your score will improve as you pay off the balance.

Williams recommends holiday savings accounts when planning for next year. Some financial institutions offer incentives for opening such accounts.

“That way, next year, your holiday budget is pretty much already set, and you can add to or take away from that,” she says. While these savings accounts don’t pay much in interest, it’s simply an automatic way to fund your holiday spending ahead of time.

4. Prepare now for tax time

“I always make my CPA earn her keep,” Williams says. Williams does this by asking her tax advisor to send her a list with receipts and documents she will need for her specific tax situation.

She also suggests using an app to scan and organize receipts rather than stuffing them into an envelope or a box. This makes it easier and more manageable to gather information. “

Gig economy earners should also be aware of tax breaks and write-offs that they qualify for, Scudillo says — and have the receipts to back them up.

5. Monitor your credit

Monitoring your credit history and score is especially important this time of the year when fraud often seems to be on the uptick.

“You can be proactive by downloading a free credit tracking app,” Williams says. She says any errors or discrepancies should be reported to the credit bureaus.

6. Keep your life-after-work goals in mind

Check retirement plan limits and see if you can kick your contributions up a notch or two.

“One year-end review that we often see with younger professionals is that they get a bump in their compensation over the course of the year — but did they also bump up their savings?” Scudillo asks.

He suggests seeing if your employer offers an automatic annual deferral increase to its 401(k). This is often called an automatic escalation option. It allows you to increase your employee contribution by a fixed amount each year. For example, it could be 1% per year.

“We highly recommend that because it takes away that human inertia that people fall into,” Scudillo says. To increase our savings, we often “delay”, procrastinate or forgo.

“I think a lot of times we don’t ask enough questions,” Williams says. Williams says that people don’t like looking at retirement accounts statements or calling to ask questions about investing. If your employer offers a 401(k) plan, the investment company that sponsors the plan can be an excellent — and free — source of advice.

Scudillo has one final tip: If you don’t have financial goals, set them.

“If we had a certain targeted amount that we wanted to save over the course of the year, review: Did we get there? If not, why not? “

Hal M. Bundrick, CFP, https://www.nerdwallet.com/article/finance/net-worth-yearend-checklist
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