It’s time to take stock of your personal finances in 5 points at the end of the year


A mature woman checks her finances at home.

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It seems the older you get, the faster the holiday season sneaks up on you. While that may mean happy get-togethers and festive cocktails, the end of the year also signals that it’s time to do some financial cleaning.

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Don’t worry: Doing a year-end personal finance review might not be among your most exciting plans in December, but it’s not hard to do. Plus, you’ll be setting yourself up for a more prosperous 2023. Here are five key areas to check before the end of the year.

Revise your budget

Taking a look at your budget every year is always a good idea. However, given the economic pressure Americans have been facing recently due to inflation, it’s essential to make sure your budget can support your spending for the next year.

Brian Greenberg, Founder and CEO of Insurist, suggested making a list of your assets and liabilities first. Go through your bank statements, credit card statements, investments, and any other documents showing how much money you have (and how much you owe).

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Next, figure out how much money you have left after paying all your bills.

“This will help you determine what percentage of your income is spent on expenses such as rent or mortgage payments, utilities, food and clothing costs – anything that doesn’t count as an expense account. investment or savings,” Greenberg said. Then compare these two numbers and see if anything needs to change.

For example, Greenberg said, if you spend more than 40% of your income on discretionary spending, you might want to consider channeling more money into savings or retirement instead. Now is a great time to adjust where your money goes and come up with a better spending plan for 2023.

Review your healthcare costs

Healthcare costs are one of the largest recurring expenses people face each year, according to Ari Parker, author of “It’s Not That Complicated: Medicare’s Three Decisions to Protect Your Health and your money”. December can be a critical time to realize savings in health care.

“If you’re retired and on a fixed income, saving on medical bills is one of the most effective ways to improve your financial situation in 2023,” Parker said. “My biggest piece of advice is to take the time this month to assess how much you’re paying for doctor and specialist visits, prescription drug costs, and any ancillary benefits like dental, vision, and health care.”

You may be paying thousands of dollars on those bills alone, but Parker said you can save hundreds of dollars by assessing whether you’re on the right health insurance plan. Take advantage of open registration periods to make the necessary changes.

Review retirement savings

Another key area to review at the end of the year is your retirement savings.

“The TIAA conducted a survey earlier this year that showed only about a third of American workers say they are very confident they are on track to retire when they want to, afford the style of life they want in retirement or live comfortably through retirement without running out of money,” said Jarrod Fowler, head of TIAA’s Investment and Advisory Center.

At the very least, you should contribute enough to take full advantage of any employer match, which is typically 3% to 5%.

“Talk to your human resources office about different retirement savings options and meet with a financial planner, which many companies offer,” he said. “They can help you come up with a plan that works best for you.”

Look for opportunities to harvest tax losses

Harvesting tax losses can be a great strategy in December, according to Ksenia Yudina, CFA, founder and CEO of investing app UNest. This involves selling stocks, ETFs, mutual funds, and other loss-bearing investments to offset the capital gains of other high-performing investments.

“Since the stock market was down this year and many investments lost value, there are plenty of opportunities to sell investments at a loss,” Yudina said. “If an investor has no capital gains to offset in the year the capital loss arose, the loss can be carried forward to offset future gains or future income – there is no date expiration.”

However, Yudina added that investors should be aware of the “wash sale” rule. This states that if you sell an investment at a loss to reap tax losses, you cannot redeem the same investment for 60 days.

Also check on yourself

Finally, Yudina said it was important to acknowledge and moderate any inner conflict.

“Even the most sensible financial resolution can fall victim to pesky human emotions,” she said. “Impulse buying, especially during the holidays, can fill a temporary void, but will likely make you feel less than stellar in the New Year.”

So be sure to take the time to relax, reflect, and identify spending triggers before they get the better of you.

“Train yourself to staying focused on the end goal of financial independence for you and your children,” she said. “Once you’re sure your priorities are clear, allocate a reasonable budget for vacation expenses.”

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