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  • Writer's pictureLeyder "Aiden" Murillo, MBA

5 Financial Things to Consider for Your End of the Year + Free Resources Included

Updated: Aug 24

Today I will share with you 5 financial things to consider for your end of the year. Perhaps you may have overlooked some of these things, or if you already have these in mind.

Also, I share a few free resources; that way, you can consider the other things that may not have come to mind—resources at the end of the article.

5 Financial Things to Consider for your End of the Year - Wolfpack Wealth Management, calendar, planner, clock on table

So far, 2020 has proven to be somewhat of an eye-opening year that has offered us many valuable lessons. As a new year is upon us, we usually use this to create a New Year's resolution. Are you ready to make some financial New Year's resolutions?

Here are 5 things to keep in consideration for your finances this end of the year:

Look Back and Reflect

Spend 30 minutes (by yourself, with your partner or family) and review your finances by going over your credit card and debit/bank statements. This review will allow you to check your spending habits and compare them to your priorities and budget.

Perhaps the most important topic to note is the COVID-19 related events reflected in these statements as it may have shifted your priorities.

Take note of these events and consider if they will continue. Also, note any missteps you may have taken this year and emphasize how you can do better next year. Think of it like this, if you had the chance to re-do this year, how would you do it financially? What would you change?

Get Some Clarity on Your Goals

With a clear understanding of your priorities now, you can focus on your short, medium, and long-term goals.

Follow the SMART goals framework:

  • Specific – Define a clear, specific goal (ask yourself: who, what, where, why, and which). Why is the goal important? What are you trying to accomplish?

  • Measurable – Make sure that you can track the progress. How will you know when it's accomplished?

  • Attainable – Work towards something that is possible/realistic. How realistic is the goal based on constraints such as financial factors?

  • Relevant – Stay honest with yourself and know what you are capable of. Do you need assistance with reaching this goal? Will you require assistance from a financial professional?

  • Time-Based – Create a target date (deadline). What can you do today? If you check-in within 6 to 12 months, will it be on track?

Make sure to consider inflation when thinking about your goals. Inflation is the imaginary piece that slowly eats away at your buying power every year. Consider looking at your bank and savings account. With interest rates low, savings accounts interest rates are low. Commonly, savings account funds need to be used within a year. Any funds not used within the year shouldn't continue to be in a savings or any bank account because inflation eats away at your buying power. On average, inflation is about 2%. Therefore, something that costs today $100 will cost $121.90 in 10 years.

Prepare for Uncertainty

Something that 2020 has taught us is to prepare for uncertainty by having an emergency account. Only about 41% of people would be able to cover a $1,000 emergency. Imagine losing a job and being able to cover everyday expenses. Having cash savings comes in handy, especially if there is a reduction of work or if an emergency expense emerges. Even though interest rates are low (see the previous point), the notion of a savings account is to have at least, if possible, up to between six months to one year of expenses saved.

Automate your savings before you ever see them. You can do this by setting up a direct deposit from your employer. Therefore, you do not see it in your checking account. You ask your employer to delist a certain amount from your paycheck into your savings account and the remaining into your checking. Putting your savings on autopilot, you won't be tempted to spend it while also not forgetting to do it but be mindful to check in on the amount to make sure it doesn't surpass the amount needed for a year.

Remember, keeping more money in savings or a bank account will deplete your buying power (again, see the previous point for inflation risk example and explanation).

Save More on Your Taxes – Think Retirement!

If you can afford it, maximize your 401(k) contributions. Maxing out your 401(k) lowers your taxable income while also getting a specific match limit from your employer (typically 3%).

If you do not have a 401(k) because you don't qualify for one yet, consider transferring money into a traditional IRA. With a traditional IRA, certain income limits apply to tax deductibility.

If you are self-employed (this includes side hustles), you may consider putting money into a SEP (Simplified Employee Pension Plan) IRA. You can only deduct up to 25% of your compensation (adjusted for net earnings if self-employed) up to $58,000, whichever is lower.

Guess what, if you have a 401(k) and a side hustle, you can still contribute to the SEP-IRA – talk about winning for retirement!

We are living longer, and therefore our longevity has put us at risk for not having enough for retirement. Therefore, think about lowering your taxes now and having enough for your retirement in the future.

Go Harvesting for Tax Losses

As the name implies, tax-loss harvesting is the strategy of selling investments that currently have unrealized losses. By selling, you realize the loss and, in effect, help lower your capital gains tax liability. Although it is painful to lose money, the pain may seem minimal if it helps reduce your taxes.

There are limits for deducting losses: $3,000 per year or $1,500 for married filing separate returns.

Your Takeaways

If the year 2020 taught us anything, the world can create a big mess and can put us in a financial bind without being prepared for it. This big mess makes a shock that then sends out waves of domino effects, hurting personal finances.

Look at the new year as a start to something new – a clean slate. You will write 365 chapters in your life, and sometimes there's some drama within the book, and is your financial life prepared for it? Building a budget with a plan should help you focus more on building your goals. This plan should have contingency plans just if the drama gets out of control and creates domino effects.


End of Year Financial Review Checklist (Free PDF Download)

Use this checklist to give you a sense of what issues you should be reviewing.

Important Tax Numbers (Free PDF Download)

Use these tax numbers as a reference.


Ready to take control of your financial future? Schedule your free financial assessment and discover how working with a wealth management advisor is accessible and helpful in reaching your financial goals. Start building the future and wealth you deserve.

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