The Year-End Financial Checklist (15 Personal Finance To-Do’s)

With yet another taxing year coming to a close, your first instinct may be to go into survival mode until you get a few holiday days off, indulge in a little self-medication that may or may not include egg nog, and then hibernate through the end of the year. While that sounds tempting and would certainly be justified, I’d also recommend taking on a little personal finance housekeeping first. There is no better time of year to get your financial life in order than the month of December. My self-practice and recommendation to you: calendar-in 1-to-2 hours of time now to go through the following year-end personal finance checklist that I’ve prepared and personally use. Rinse and repeat at the beginning of every December. Your future self will thank you in 2024 and beyond.

1. Spend “Use it or Lose it” FSA Funds

If your employer hasn’t temporarily enacted the COVID FSA carryover rule expansion, you could lose a sizable chunk of your contributed FSA funds at the end of the year. The FSA carryover rule allows up to $610 in un-spent carryover funds from 2023 to 2024 (if your employer even allows that). Some employers may allow you to spend prior years through the first few weeks of the year.

Check with your employer and then spend any un-spent use-it-or-lose-it funds that will vanish at the end of the year. It’s easier to spend FSA funds than it has been in a while, due to recent expansions of what is permitted. OTC medications and feminine hygiene menstrual care products are qualified medical expenses. This means that you can now use FSA (as well as HRA and HSA) funds to pay for these items. Telehealth and virtual mental health services are now qualified medical expenses too. Prescription glasses or contact lenses are an old but often overlooked qualified medical expense too. Here’s a list of FSA-eligible medical expenses (some of which you may find surprising).

2. Make your Deductible Charitable Contribution

For tax deduction purposes, qualifying charitable contributions must be made by the end of the year for the respective tax year filing. With expanded standard deductions that were part of the tax reform that was rolled out a few years ago, itemized deductible charitable contributions are only utilized by about 11% of filers, but if you do itemize, right now is the time to do it. Just make sure to hold on to your donation receipt if you do deduct. Even if you don’t deduct, charitable organizations could use the help. Many charitable organizations have sponsor-matching funds this time of year as well.

3. Top Off your Employer-Sponsored Retirement Plan Contributions

With most types of IRAs you have until the tax deadline to make your contribution, however, most types of employer-sponsored retirement plans (e.g. 401Ks, 403Bs, 457Bs, solo 401Ks, and government TSPs) have an employee and employer contribution deadline for the year of December 31st. The maximum 401K, 403B, 457B and TSP contribution for 2023 is $22,500 (increasing to $23,000 in 2024), but any little extra that you can contribute helps and will come with present (traditional) or future (Roth) tax benefits.

If you want to make contributions to your account that could still take effect via payroll and make a difference this year, don’t hesitate on making the changes, as there will likely be a bit of lag time (you may already be too late). If you have more than sufficient cashflow to cover your expenses this month, you may even be able to put 100% of your remaining paid income into your retirement plan. Note: you should check for specifics on what your employer allows, as some require equal periodic payments over the course of the year.

4. Make 529 Plan Contributions

If you have a 529 plan for yourself or for your children, 6 states (GA, IA, MS, OK, SC, and WI) have lenient April deadlines (in the subsequent year) for their 529 plans, but all other states require annual contributions to be made by the end of the calendar year (December 31). 529 Plan contributions are tax-advantaged (some states allow deductions, but they are similar to Roth IRAs and are not tax deductible at the federal level).

5. Use Up & Refresh Expiring Credit Card & Travel Rewards Points and Benefits

If you have ever accidentally lost hard-earned credit card or travel rewards due to expiration deadlines, you know how much it can sting. Some credit card and travel rewards programs have expiration dates that are associated with the dates you earned the reward or signed up for the program, but others will go by the calendar year instead. I created a spreadsheet for myself that lists every rewards program I am, rewards that I’ve earned, and expiration dates. I’d suggest tracking the following:

• Point/mile expiration dates (for account inactivity, other)
• Certificate reward expiration dates (e.g. flights, hotel nights)
• Unused annual perks (e.g. credits for certain expenses)

6. Review your Tax Withholding Situation

With tax brackets and standard deductions changing every year with inflation and your income level also likely changing, this is the time of year to review your income and make any tax withholding changes for the following year. Grab your most recent payroll statement and use the IRS W-4 form to calculate any needed changes for next year before submitting to your employer.

7. Re-shop Your Insurance Policies

Many insurers set their rates for the subsequent year in November/December, so this is a good time of year to re-shop your insurance to see if your insurance needs have changed and make sure that you’re still getting the best possible rate for what you need. Insurance companies will often lure new customers in with discounted teaser rates for the first year and then quickly jack up rates in subsequent years. The longer you stay with an insurer, the more likely it is that you will find a better rate elsewhere.

8. Review your Spending Over the Last 12 Months and Trim the Fat

I’m not a fan of arbitrarily pulling a budget number out of the sky and setting that as the monthly limit for what you will spend. I think a more effective technique is to track and categorize your spending with a spreadsheet, figure out where the fat is, and then trim it. Take particular interest in recurring expenses like subscription services and utilities (e.g. streaming, internet, cell phone, cable, insurance, memberships, etc.).

9. Set Financial Goals for Next Year

With a full year rounding out and coming into focus, there really isn’t a better time to set and document some short and long-term saving and spending goals. Taking a few minutes to do this during time off has always been enjoyable to me and given me some objectives that I could hold myself accountable to later on. If you aren’t doing this, then what is the point of spending over half of your week working for the man (or woman)?

10. Make ACA Marketplace Enrollment Changes & Sign Up for Next Year

For those who are enrolled in an ACA marketplace plan, your days are numbered on making changes to your plan. Most states now have an open enrollment deadline of January 16, 2024 for next year’s plans. If you are currently enrolled in a plan, it’s always a good idea to re-shop during every open enrollment period because the prices for every plan change each year and new plans may be offered that could be a better deal than your current plan.

Additional To-Do Items

I won’t go into full details here, but it’s also a good time of year to do the following:

11. Rebalance investments

12. Tax loss harvesting in taxable investment accounts

13. Negotiate better interest rates on your debt

14. Top off HSA contributions for the year (the HSA contribution deadline is the tax filing deadline)

15. Review your credit reports and remedy any errors

Personal Finance To-Do Checklist Discussion:

1. Which of the above items will you be focused on in the next few weeks?
2. What year-end financial to-do items are on your list that I didn’t highlight above?