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Dave Ramsey's Smartvestor

Year-End Money Tips

October 14th, 2019 | 2 min. read

By Jacob Schroeder


finances_in_orderWant to close out the year on a financial high note? Then use the last couple months of the year to get your finances in order. A little year-end financial housekeeping lets you potentially lower your current tax bill and prepare your investments and budget for a successful new year.

Try to maximize your retirement account contributions

Well, at the very least, try to save as much as you can by December 31. In most cases, contributions to a workplace retirement account reduces your taxable earned income. The maximum you can contribute to a 401(k) is $19,000 (2019). If you’re age 50 or older, you can contribute an additional $6,000, for a total of $25,000.

If you are instead saving in an IRA, contributions to a Traditional IRA are tax deductible. Your deduction, however, may be limited if you (or your spouse, if you are married) are covered by a retirement plan at work and your income exceeds certain levels. Roth IRA contributions are not tax deductible.

For 2019, you can save up to $6,000 in an IRA. The catch-up contributions for those 50 and over are $1,000, for a total of $7,000.

Review your investments and progress toward your savings goals

Your 401(k) and other investment accounts should be set up to help you achieve a specific savings goal, chiefly retirement. Throughout the year, market changes likely impacted the value of those investments, which means you may need to make some adjustments. In other words, you may not have the right mix of stocks, bonds, cash, etc., that you’re comfortable with to meet your goals.

You may have too much or too little risk, depending on your objective. The start of a new year is a wonderful time to rebalance – selling what has gone up and buying what has gone down – if necessary. If you rebalance, you want to be mindful of taxes. To avoid unnecessary taxes and to make sure the mix of investments are properly aligned with your goals and risk tolerance, review your investment accounts with the help of a SmartVestor Pro.

Review and update your budget

Did you spend less than you earned this year? Or, are there problem areas that could prevent you from reaching your goals? What expenses can you reduce to help you save more? An annual checkup of your budget is a good way to keep you on track and help improve your spending and saving habits.

Check your tax withholdings

Checking your withholding can help protect against having too little tax withheld and facing an unexpected tax bill or penalty at tax time next year. You can check to see if the right amount of tax is withheld from your paycheck by using the IRS Withholding Calculator.

Check your credit report

To help protect your identity and catch any nefarious activity with your money, you should check your credit report. Sure, you can check your credit report any time of the year, including once for free. But, the year-end makes for a good reminder.

Evaluate your insurance coverage and rates

Insurance rates change like the weather. Therefore, each year you should review your insurance policies to make sure you are getting the best rate and have the right amount of coverage.

Update your beneficiaries

As your life progresses, you may want or need to change your beneficiaries. For example, you may get divorced or one of your children may get married and change his or her last name. Even if your wishes change, your assets will be rewarded to the written designation upon your death, no matter how old the information. Naming the wrong people or failing to update your documents can create a mess for your heirs, such as the hassle and expense of probate court.

Get a financial check-up

The end of the year is often a time of reflection. As you think about your loved ones and the events of the past 12 months, give some thought to your future. Better yet, consider meeting with a SmartVestor Pro who can take a look at your current financial path and help put you on track for an even better year and beyond.