As you prepare to bid farewell to another year, you may be reflecting on the past eleven months and looking at the goals you set for yourself in 2023. Did you achieve what you wanted? Did you grow personally, professionally, and financially?
Financially, perhaps you added to your emergency or college fund or finally paid off that credit card bill. If so, congratulations! On the other hand, perhaps you went off course and did too much impulsive shopping or had to replace good ole Bessy, your faithful vehicle from 2001. If so, don’t be too hard on yourself. Life can get busy, and it’s easy to lose track of our financial goals.
Before flipping the calendar, review a few year-end financial tips before saying goodbye to 2023.
Review your financial goals
Take some time to assess your financial goals and see if you’re on track to achieving them. This can help you prioritize your financial decisions and make any necessary adjustments before the year ends.
Maximize your retirement contributions
If you haven’t already maxed out your contributions to your retirement accounts, such as a 401(k) or IRA, consider doing so before the year ends. This can help you take advantage of tax benefits and boost your retirement savings. You can contribute a portion of your earnings to a 401(k) account tax-free, subject to annual limits set by the IRS. Maximizing your 401(k) makes sense, however, if you are struggling financially or have better retirement savings options, maxing out your 401(k) may not be in your best interest.
Review or update beneficiary designations
Now is the time to make any needed updates to the beneficiary portion of your bank accounts, retirement accounts, life insurance policies, annuities, etc. Doing so will avoid your estate going through probate, which is costly and time-consuming.
To help keep track of your beneficiaries, write down their names along with the date. If the beneficiary has a common name, consider including the person’s birthdate and social security number, along with their relationship to you. Also, be sure to designate a contingent beneficiary in the event your primary beneficiary passes away.
The key to ensuring your beneficiaries receive what you intend is to be well organized:
- Keep your life insurance records in at least two places—preferably one inside (with other financial records or legal papers) and one outside the home (safe deposit box, trusted relative or professional).
- Ensure your documents have complete details (dates, policy numbers, the amount of the death benefit, the name of the agent who sold you the policy, etc.).
- Ensure your beneficiaries know where to locate the documents after you’re gone.
Review tax deductions, credits and withholdings
Before the year ends, review any tax deductions or credits that you may be eligible for. This can help you minimize your tax liability and potentially increase your tax refund. Did your marital status change or did you add a new family member to your household? Did you receive unemployment compensation or experience a job loss? These questions help determine your tax withholding amounts. If you want to calculate how much withholding you will need in order to avoid paying taxes in the coming year, you can use the IRS’ handy Tax Withholding Estimator tool.
While we are on the subject of taxes, start prepping for your returns by ensuring your financial institutions and employers have your correct contact information. Start gathering the documents you’ll need to file your 2023 taxes (prior returns, receipts, bank and credit card statements), as well as any applicable W-2, 1099, 1099-G (for unemployment) or 1098-E (for student loans) documents.
Review your insurance needs
Health insurance, life insurance, homeowners insurance and auto insurance—the types of insurance you may need seem endless. To ensure you have the proper coverage, consider any changes in your circumstances that may require adjustments to your coverage.
Reviewing homeowners insurance
Homeowners insurance premiums can fluctuate for numerous reasons such as weather/climate disasters or increasing crime in your area.
Fortunately, there are steps you can take to help decrease the cost of your premium:
- Increase your deductible.
- Consider using the same insurance company for your homeowners and auto coverage. Bundling your insurance can significantly lower your premium.
- Home improvements, such as removing dry brush around your property (we do live in a fire-prone state) may help decrease your premium.
Also, if you accumulated more possessions since the time you purchased your policy, reevaluate your homeowners policy to be sure it covers everything of value.
Reviewing auto insurance
Every state has minimum car insurance requirements. Review the types of coverage Oregon requires and explore potential rates and discounts, or work with a professional to get an affordable rate.
When determining how much you should pay, car insurance companies determine your premium by considering your age, driving record, the type of vehicle you drive, where you live, and credit score (check your free score using Credit Savvy in your Mid Oregon Digital Banking platform).
However, that doesn’t mean you can’t do things to help lower your car insurance cost:
- Increase your deductible.
- Bundle your insurance policies.
- Review your type of coverage. Do you still have full coverage from when your vehicle was new and you were making loan payments? If it is paid off and a few year’s older, you might consider switching to lesser coverage. Review how much you need and get quotes from a few different companies.
- Look for other discounts:
- Good driving record, vehicle’s antitheft devices and safety features.
- Miles driven each year. If you are one of the many people with previous office jobs who now work from home, see if you can use that to your advantage.
Review your investment portfolio
Evaluate your investment portfolio to ensure it aligns with your risk tolerance and financial goals. Consider rebalancing your investments if needed and make any necessary adjustments. Make sure your financial plan still fits your needs, wants and wishes. Did you inherit some money in 2023, or perhaps find your job less secure than it was last year? Your portfolio should reflect investment objectives that are appropriate for your current life stage. Your age, risk tolerance, tax status and time horizon, among other factors, are all important.
We can help you ensure your financial portfolio and investments are on track. Contact your credit union financial professional, Marc Cabanilla, Mid Oregon Wealth Management for more information.
Spend eligible flex dollars
A healthcare flexible spending account (FSA) can save you money— as long as you spend the pre-tax dollars before the end of the year. If you do not, you run the risk of losing it (unless your employer offers a grace period or allows you to carry over a specific amount into the next year). So, make that last-minute dental or acupuncture appointment while there’s still time.
A tip for next year’s open enrollment period: If you, your spouse or your child is going to need medical services, consider contributing to your FSA at least the amount of your health insurance deductible.
Check-in on your emergency savings account
In a perfect world, we all would have three to six months’ worth of emergency savings set aside. We know this goal is difficult—especially with rising food and fuel prices, which make it difficult for some to care for their family’s everyday needs.
Remember that unexpected emergencies, such as a car repair, loss of job, or a medical expense, could set you back financially. To help ensure that doesn’t happen, try building up your savings by automatically depositing some money from your paycheck into a dedicated savings account.
Mid Oregon has an array of savings account options to choose from to help build your emergency nest egg.
If you have kids, contribute to their college fund
College tuition isn’t for the faint of heart. But having a tax-advantaged strategy in place can help you prepare for the rising costs. If you already have one, try to contribute as much as you can. Ask your Mid Oregon team members what options would be a good fit for your specific situation.
Make charitable donations
Donate to an organization that’s close to your heart. The benefits are two-fold: You will reduce your taxable income and feel good about giving some of your hard-earned dollars to a good cause. Mid Oregon is currently holding its annual Holiday Dough fundraiser, which benefits local-area food pantries—ensuring that every family has help with holiday meals and other essentials this season.
Plan for the future
You blink, and now 2024 has started as quickly as 2023 ended. Next steps—be sure to set some new goals (or keep some of the same ones) and commit them to paper. Do you want to beef up or start building your retirement, or simply save some money for your child’s ski lessons? Do you have any big changes on the horizon such as having a baby or changing your career? Creating goals surrounding these anticipated events will bring peace of mind and hopefully money to your account.
If it’s realistic, try to create a savings plan for a family vacation or another memorable event. It’s a great motivation to save when you have something to look forward to, even if that something will occur sometime down the road. This is another great reason to open a dedicated savings account and set up an automatic transfer of funds to get you closer to your destination. And don’t minimize how effective dropping your loose change into a change jar can be.
Regardless of your financial situation, your Mid Oregon team is here to help you every step of the way—please stop by, call, or visit us online at midoregon.com. We also encourage you to stay tuned to future member newsletters, blogs, and workshops for more financial fitness topics.
We hope you find the above tips helpful as you wrap up 2023 and move forward with your financial future. And remember, it’s progress not perfection.