Part Two: 29 Smart Financial Tasks to Complete Before Year-End

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Welcome to part two of our year-end money moves series.

Part 1 focused on the big Three: retirement, investments, and taxes. Now, it’s time to explore several other tips that can set you up for a smooth year-end transition. 

Use All of Your Available Company Benefits

Some of your company benefits may be “use it or lose it.” Ensure you take advantage of all your employer benefit opportunities

15. Look at Your Vacation Policy

Do your vacation days roll over each year or not? Some organizations may also pay out unused vacation days at year-end; it simply depends on the company. Either way, you want to take advantage of your opportunities. 

If your paid time off (PTO) expires at the end of the year, maybe you can take an extended winter holiday.

16. Don’t Leave Funds in Your FSA

A flexible spending account (FSA) is a tax-advantaged account that lets you save for medical costs each year. FSAs aren’t as flexible as HSAs because you can’t roll over the entire balance year-to-year, and there’s no option to invest the funds. 

In 2021, you can save $2,750 into an FSA. 

Typically, you need to use all funds in the account before the year is up. If you don’t, many plans offer one of two options:

  • A grace period (usually 2 to 3 months)
  • A choice to roll over a maximum of $550 to next year’s account 

If you find yourself with funds to spare, now’s the time to book your doctor’s appointment, update your glasses or contacts prescription, commit to dental work, and anything else health-related that might be covered by your FSA. Don’t overlook this account and lose money. 

Cash Flow Planning

Dust off your budget and haul out your excitement — it’s time for cash flow planning. 

17. Evaluate Your Budget

When’s the last time you checked in on your budget? If you can’t remember, don’t worry, year-end is an excellent occasion to get back on track. 

The winter season often comes with increased spending from gifts to travel to food and more. Instead of stressing about it, factor that extra expenditure into your budget. Budgets shouldn’t be restrictive, rigid documents — they’re there to help you outline your spending in ways that support your broader goals and values. 

For you, hosting your entire family for a holiday dinner may be a top priority. If so, include those costs in your budget (food, ambiance, and all). In short, use your budget to reflect your values, not restrict them.

18. Create a 2022 Cash Flow Plan

A cash flow plan is all about intentionally controlling the money flowing in and out of your accounts. Keep in mind that all your financial activity — spending, saving, investing, giving — should have an intention and purpose behind it. 

Your goals support your most rewarding money habits. Carve out time to create a cash flow plan with these ideas in mind. 

Assess Your Debt

Ready to crush your debt goals in the new year? Consider the following ideas. 

19. Evaluate Your Progress to Being Debt-Free

Reflect on all the progress you made toward paying off your debt this year. 

  • What are you most excited about (paying off high-interest debt, refinancing for a better rate, etc.)? 
  • Where can you improve (consolidating, allocating more funds to debt, etc.)?

20. Make a Plan for Debt in the New Year

Remember, not all debt is bad. Sometimes debt can help you reach a goal, like buying a house or getting an education. Think through any big plans you have in the coming year that may require you to take on additional debt. Building a strategic plan beforehand gives you the time and tools to secure suitable loans and save up enough cash to prepare.

Charitable Giving

For many, charitable giving is an essential year-round task, but charitable activity undoubtedly surges at year-end. Here are some ways to think about giving this year. 

21. Contribute to a DAF

A donor-advised fund (DAF) is like a charitable investment account. You can contribute various assets (cash, appreciated assets, collectibles, art, etc.), receive an immediate tax deduction, and recommend grants from the account to qualified charities of your choice. 

DAFs are wonderful tools to encourage year-round and family giving. Perhaps each year, one family member can choose a charity to donate to based on their passions. Doing so can make family giving a beautiful tradition. 

22. Retirees, Consider QCDs 

Retirees, this strategy is all for you. A Qualified Charitable Distributions (QCD) is a giving avenue that enables retirees to donate to charity via their traditional IRA. You must be at least 70 ½, and you can transfer up to $100,000 ($200,000 if married and each spouse contributes).

QCDs are advantageous in several ways:

  • You can donate all or a portion of your required minimum distributions (RMDs), which minimizes your taxable income and maximizes your charitable gift 
  • You don’t have to itemize deductions to take advantage of this strategy
  • You can give more to your favorite organizations than if you took a distribution then donated the money

23. If You Want to Itemize, Consider “Bunching” Strategies

Because of the higher standard deduction, many individuals and families aren’t itemizing as often as before. But if you’re looking for a strategy to itemize deductions, a “bunching” strategy can consolidate a few years’ worth of contributions into one. 

Say you typically donate $5,000 to charity. With your other deductions, you wouldn’t have enough to surpass the standard deduction. But, if you “bunched” your charitable donations and gave $10,000 every two years, you may now have enough to itemize. 

This way, you still maintain your regular giving cadence and can reap some tax rewards. 

24. Donate Your Time

Giving back to charity doesn’t just come through dollars and cents. Donating your time, talents, and resources can be just as valuable a gift. This season, take time to volunteer for a cause or organization you care about, invite family and friends to a charitable fundraiser, or donate your professional skills to a charity. 

25. Not Itemizing? There’s an Above-The-Line Charitable Deduction

Just because you’re not itemizing doesn’t mean tax incentives for giving are off the table. Thanks to the CARES Act, those filing as ‘single’ can deduct up to $300 in cash donations. That number jumps to $600 for those married filing jointly. 

This deduction only applies to cash donations, so be sure to keep your receipts. Above-the-line deductions are great ways to encourage more people to give, so take advantage of them.

Estate Planning

During this restful season, perhaps the last thing you want to think about is estate planning. But estate planning is important throughout the year, even during the holidays. It’s essential to have everything in order so you and your loved ones are prepared for the future. If you don’t have an estate plan, now’s the time to create one. Get started by following our estate planning checklist. If you already have an estate plan, here are a couple of matters to attend to. 

26. Review Beneficiaries

Your beneficiaries are the people (or organizations) that receive your assets should something happen to you. Keeping your beneficiaries up to date is critical as this designation often supersedes what’s written in your will. 

It’s often best to update your beneficiaries after a significant life transition like marriage, divorce, children, or blending a family. Keep in mind that minor children under 18 (21 in some states) can’t inherit property.

In addition to primary beneficiaries, also take a look at your secondary beneficiaries. 

27. Draft or Review Other Estate Planning Documents

Estate planning is a complex process and often requires a specific attorney to help you draw up papers and ensure everything is sound. Below are a few other important documents you may want to review before the new year.

  • Financial Power of Attorney. Should you become incapacitated, this person makes financial decisions on your behalf (pays bills, handles taxes, etc.).
  • Healthcare Directive. This person makes health-related decisions (do not resuscitate (DNR) provisions, surgeries, etc.) on your behalf should you become incapacitated. 
  • Guardian. This person has legal responsibility for your children should you pass away. Given the significance, choose someone like-minded who will honor your intent and wishes. 
  • Trustee. This person/institution will handle your finances in an ongoing capacity after you pass (manage the trust, handle finances for kids, divide assets, etc.).

Goal-Setting

Last, but certainly not least, is goal setting.

28. Set New Goals 

Goal-setting is one of the most exciting things on this list as it gets you thinking about the fantastic things you hope to accomplish. Ask yourself:

  • What progress have you made on your goals this year?
  • Did you encounter any roadblocks in 2021?
  • Have your priorities shifted, and what does that mean for your goals and resulting financial plan?
  • What goals are you most excited to pursue in 2022?

Your goals are the bedrock of your financial plan. They inform the practices, behaviors, and habits that can help you find success. 

Develop a Relationship with a Trusted Financial Advisor

You don’t have to complete this entire list on your own! Seek out the guidance of a trusted financial team and let them collaborate with you on the financial life you’ve always wanted.

29. Meet with Your Financial Advisor Regularly

Getting your financial house in order is no small feat. And this list, while comprehensive, only scratches the surface of the nuances involved in creating and maintaining a financial plan designed specifically for you

Maybe one of your goals in the new year is increased financial wellness. If that’s the case, a fantastic first step is finding a financial team you know and trust. 

Abacus advisors are passionate about helping you expand what’s possible with your money. Schedule a call with our team today and see what a difference a true financial partner can bring to your life and money. 

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