8 Year-End Financial Tips


We understand this time of the year can be hectic between traveling, shopping, and enjoying time with loved ones, but it isn't the time to disregard your finances. If you don't take advantage of this time, you could miss out on crucial deadlines for money-earning or money-saving opportunities. These year-end financial tips were developed to be a simple but crucial tool for checking in on your finances. Some of these suggestions may be applicable to you, while others may not. However, before we approach 2022, it's worth scanning the list below to ensure you have things covered for the new year.


1. Your Portfolio

The stock market had a very wild year. If you made it through the rollercoaster, sections of your portfolio might have performed admirably, while others may have disappointed. For these reasons, rebalancing your financial portfolio, including your 401(k), at least once a year or after considerable market volatility is critical. When you rebalance your portfolio, you are realigning your assets back to your target allocation to maintain your desired risk-return profile. To put it simply, you sell overvalued securities and purchase undervalued ones. If you have a financial advisor, talk to them about assessing your portfolio today.


2. Budgeting

The end of the year is a great time to go over your expenditures and savings to see if there are any adjustments that need to be made. Examine your service bills, such as wireless and cable, to see if you can obtain a better deal, and consider consolidating your insurance policies with one provider to save money. Examine the balances in your long- and short-term savings accounts; if you're not on track, look for methods to change your budget so that you can reach your objectives next year. It's never too early to start planning for significant costs like trips, weddings, education, and other major purchases. That might imply making a strategy to pay for it without taking out a loan. Sticking to your strategy is easier if you have a positive aim in mind, so start planning the goals you want to achieve in the next year now.


3. Insurance Needs

Have you had any new additions to your family this year? Have you recently purchased a home? Started a business? Your insurance coverage at the start of the year may not be sufficient for your needs in the new year ahead. Check to see if your life insurance policy appropriately protects your family and your assets. Also, be sure that any extra coverage you've refused through your work, such as disability insurance, will still make sense for you in 2022.


4. Your Beneficiaries

Each year brings a new set of events. You may have married, had a kid, divorced, or lost a loved one this year. Whatever the change may have been, consider reviewing and updating, if needed, your beneficiaries. Choosing a beneficiary is a choice that should be carefully considered. This is significant because beneficiaries typically take precedence over those designated in a will. Write down the names of your beneficiaries, as well as the date when any modifications were made, to help you keep track of them. Also, if your primary beneficiary passes away, make sure you identify a backup beneficiary. Keep this paper in a convenient location and review it once a year. Don't forget to name a beneficiary on your IRA, 401(k), IRA, Roth IRA, life insurance, annuity, and other retirement accounts.


5. Estate Planning

Estate planning isn't just for the affluent and elderly. No matter what your age or financial status, you can take action to ensure that your family's ambitions and goals are met.

If you haven't started yet, that's okay, begin with the fundamentals:

  • Make a will if you don't already have one. Or make sure it's up to date if you do.

  • If you are unable to make medical choices for yourself, consider appointing a health care proxy to do so on your behalf.

  • Consider a financial power of attorney, which gives someone the ability to make financial choices for you if you are unable to.

Also, discuss your elderly parents' intentions for end-of-life care with them, and help them to prepare the necessary legal and financial documentation.


6. Employer Retirement Plan Contributions

If you work for a company that offers a 401(k), keep track of how much money you put into it this year. In a year, you may be able to contribute $19,500, or $26,000 if you are 50 or older, before any corporate match. If you're in a position to do so, be sure you're maxing out your 401(k). Also, determine whether any adjustments are necessary for the coming year with your adviser. This is especially true if your company just switched 401(k) providers.


7. Required Minimum Distributions

RMDs are the required withdrawals from a retirement account commencing April 1 of the year after the account holder achieves the age of 72. They may also apply to beneficiaries of IRAs. Each year after that, a distribution is needed, with the amount dependent on the current RMD computation. Due to the COVID-19 pandemic, RMDs were not required in 2020. In 2021, they resumed as normal, and failing to remove them might result in a penalty. Make sure you've taken your required minimum distribution and decide whether you want to spend or reinvest the money.


8. Capital Gains and Capital Losses

"Tax-loss harvesting" is the practice of selling stocks and funds that have lost value to offset taxes on earnings from sales of those that have gained value. If you have assets outside of your tax-favored retirement accounts and have profited from selling some this year, consider if you may reduce your tax bill by selling some of the underperformers. Even if you haven't "realized" capital gains, you may be able to lower your ordinary income by up to $3,000 by using realized capital losses. Consult your financial advisor or accountant about which investments you should sell to benefit from tax-loss harvesting.



Schedule A Consultation with an Experienced Financial Advisor

Here at Fourth Avenue Financial, our first priority is your overall financial success. We want to help you develop, implement, and monitor a strategy designed to address your individual situation to ensure all your investments are setting you up for a path of financial success. If you are ready to start planning for your financial future, we are here to help. Contact us today at (304) 746 7977 to schedule a meeting with one of our experienced financial advisors or schedule online: https://calendly.com/fourthavenuefinancial/introductory-zoom.

Securities are offered through J.W. Cole Financial, Inc. (JWC) Member FINRA / SIPC. Advisory Services are offered through J.W. Cole Advisors, Inc. (JWCA). Fourth Avenue Financial and JWC/ JWCA are unaffiliated entities.


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