Between this month’s holiday celebrations, school concerts and all the other events on your calendar, you may find yourself working through a hefty to-do list. But squeezing in some financial tasks could position you to kick off 2023 on a positive note. Here are five things you can do to improve your finances in December.
Good planning is all about balance. Earning an income, following a budget and maintaining a financial plan can, at times, feel like hard work. And while saving for tomorrow to take care of yourself and others is an important focus, a good plan affords happiness today, too. A financial plan should give you the confidence that you're on track to meet your goals in the future, making it easier to treat yourself and enjoy your earnings today.
So, buy yourself that new computer, take a spa day, go to a nice dinner out or book a tropical vacation. If a splurge doesn't fit in your financial plan right now, there are ways you can treat yourself without spending too much. Take an extra day of PTO to relax. Pause your to-do list and use the weekend off to catch up on your shows. Invite a friend or family member to enjoy a holiday activity with you. Any treat can help you stay balanced, making it easier to stick to your plan in the long term.
Connect with family on finances
The holidays are often filled with extra time off work and quality time with loved ones. Using some of this extra time to connect with your family on important issues — like finances — can bring you closer together by getting on the same page. Sit down and work through any money differences with your partner or have important conversations about your financial plan (including retirement) to ensure you're on track for your collective goals. Discussing money with kids is a great habit to get into, too. Educating kids on topics like healthy money and credit habits can help prepare them for financial independence as they get older.
Take care of your family with a value-driven estate plan
Making sure your family is taken care of now — and once you're gone — is one of the main goals of an estate plan. Whether you're just starting to put together an estate plan or reviewing an existing one, you'll want to make sure your values and wishes are documented clearly. Appointing guardians, naming beneficiaries and purchasing a life insurance policy will make sure your family’s needs are covered if you’re no longer there. As part of your legacy planning strategy, you'll also want to weigh important tax considerations to maximize the value of your legacy. Make sure you also take time to discuss your plan with your loved ones so they can seamlessly enact the plan you’ve set in place to help them.
Boost your retirement savings
Now that you have a complete picture of 2022, think strategically about how you're going to use any extra cash you may have in your budget. Putting extra funds toward retirement now can actually result in more money in the long run thanks to compound interest. Reviewing your retirement plan can be another great end-of-year exercise. Checking in on whether inflation is impacting how much you need to save for retirement can inform any necessary adjustments, like increasing contributions or opening different types of retirement accounts.
Take steps to avoid a bigger tax bill
End the year on a positive note by taking steps to minimize your tax bill. Following some year-end tax strategies like making charitable donations, timing income and deductions and bunching itemized tax deductions could reduce the amount you owe in taxes this year – and in the future. If you're unsure about how to navigate these topics on your own, consider meeting with a financial advisor to review your overall financial picture and get recommendations.