2022-09-27

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7 Steps To Add To Your Year-end Financial Plan

8 min read

We promise 2022 is not far away. 2021 is almost over, but there is still plenty of time to ensure you don’t leave money on the table.

It’s a good time to reflect on the past year and make adjustments for the next year. It’s a chance to reflect on your journey towards financial wellness. Not every step is relevant to you but it can help you to create a framework to guide you as you build your future.

Here are seven steps you can take to make 2022 a memorable year.

  1. Review to start your year-end financial planning
  2. Automate your finances
  3. Maximize retirement savings
  4. Rebalance your portfolio
  5. Prepare for tax season
  6. Take into consideration your family’s financial health
  7. Set your 2021 financial goals

Start Your Year-end Financial Planning With A Review

In 12 months, a lot can happen, including your income, spending habits, risk tolerance, and financials of any securities you own. These factors can have an impact on your financial planning.

Reassess Your Spending Habits And Make Adjustments For The Next Year.

Reexamine your spending habits for the last 12 months. Are you spending more than you intended? Less? Just on the dot

No matter how your income changes in 2021, knowing what happened this year will help you plan your financial goals and financial strategy.

Review Your Investment Strategy.

Reexamine all of your investment accounts, including taxable accounts and retirement funds. Also, consider your tolerance for risk. You should ensure that your target allocations are still in line with your long-term goals and that you feel comfortable investing in the securities making up your portfolio.

Review Your Debt.

There are two types of high-interest debt: there is one and then there is the other. The financial planning mode allows you to examine your debt and determine if it is helping or hindering your goals.

You may want to pay off high-interest debts like student loans or credit cards.

Automate Your Finances

We have said it before and we will repeat it: automation is your number one advantage in building your financial future. Because your finances are not separate entities, they are integrated.

Once you have your expenses and basic income sorted, it’s time to prioritize every dollar. Because nothing works in isolation, it is important to view your spending, investment, savings, and borrowing all in one place. It is about being aware of your risk tolerance, biases, patience, and continuing education.

Check Your Automation Setup If You Have It

Your financial plans for 2021 may be influenced by the rules and schedules you established months ago. Consider the frequency and amount of your transfers, as well as which accounts you use to move money.

Automate Smarter.

Automating personal finances can be done by many platforms, with the most common being scheduled and recurring transfers. M1 also allows you to automate this.

Smart transfers allow M1Plus members to skip waiting for a date and move money automatically between their M1 accounts using rules they create. If you are new to M1, make sure to check your app for a limited-time offer on M1 Plus

Maximize Your Retirement Savings

Retirement is often the first thing that comes to our minds when we think about financial planning for the future.

It is becoming more important to plan for retirement as you age. Check for any year-end retirement opportunities as 2021 draws to a close.

Maximize Your IRA Contributions

Individual retirement accounts, or IRAs, are a great way for you to plan your future. These accounts are tax-advantaged, which means you will pay fewer taxes than other types of investment accounts.

However, you are only allowed to contribute a maximum amount per year.

You can contribute a maximum of $6,000 to your Roth or Traditional IRAs if you are under 50. The maximum contribution for those 50 years and older is $7,000.

You can delay maxing out your Roth IRA or traditional IRA contributions until April’s Tax Day deadline. However, you will need to identify the year in which the contributions should be applied. They may be counted for 2021 even if they aren’t marked 2021 if you make a contribution in the next year.

If you are still below the 2021 limit, you might want to max out your Roth IRA or traditional IRA before the end.

Transfer Your 401(k) To An IRA.

We get it — rolling over your assets may not be something you want to think about while you’re baking holiday cookies. You’re already so far into your year-end planning.

We are not denying that having your retirement savings in multiple retirement accounts can add an unnecessary layer to your personal finances. It can be difficult to keep track of all these accounts and even more difficult to create a strategy to keep each account in your mind.

You may consider rolling any 401(ks)s you have into an IRA if you are planning on changing jobs in 2021, or if you have an older 401 (k) you can use in your year-end financial planning.

You can read more about the pros and disadvantages of rolling over your 401(k), in “Should I rollover my 401(k),”

Retirees Are Encouraged To Review Their Benefits

The end of the year could be a good time to adjust your retirement contribution depending on the benefits you receive from your employer. You should now consider whether your income has changed recently or if you are not getting the most from a benefit such as a contribution match.

You can also use this step if you are a freelancer to examine any changes in your eligibility for tax-advantaged retirement account contributions or retirement accounts.

Rebalance Your Portfolio

When you reach your year-end financial planning, you will notice that some securities in your portfolio earn more in dividends or returns than others. This can affect your overall target allocations.

Your portfolio could be tilted towards too much risk and too little reward, which can cause you to lose sight of your long-term goals. This can be kept under control by rebalancing.

You don’t need to rebalance if you have been contributing regularly to your M1 accounts. Your portfolio already leverages dynamic balance.

If you haven’t been contributing regularly to your accounts, or you aren’t using M1, it may be worth rebalancing in order to keep your target allocations and your risk tolerance.

Remember that your brokerage will determine how much time and money you spend on rebalancing. Trades that you make in rebalancing can have tax implications. Some platforms also require you to manually calculate your target allocations.

Automation is one of our favorite subjects.

contains more information about automatic rebalancing.

Get Ready For Tax Season

Thursday, April 15, 2021, is tax day. Although it may seem distant, you’ll be glad you did some preparation. There’s always the next step to look forward to.

Take Into Consideration Any Tax Implications.

Are you a seller of securities? Received dividends? Have you received dividends?

Your taxes might look different when you file them.

The amount you owe if you sell securities will depend on your tax rate and the type of securities that you have.

Different types of dividends are subject to different taxes. Learn more about taxes on dividends.

Consider looking into any deductions that may be available to you if you make life-altering, potentially tax-related changes.

Consider potential tax implications before tax season so you can be ready with the questions and research you need to file.

If you are an accountant, being prepared for tax season could be the best holiday gift you can give.

To Minimize Taxes, You Can Rely On Tax-loss Harvesting

We offer tax minimization for M1, which means that we can sell securities to help reduce taxes owed.

Tax-loss harvesting is a strategy that helps investors minimize the tax owed on capital gains and regular income. It’s not intended to replace your investment strategy but it can help you maximize your money.

Anticipate Tax Documents

You won’t be able to know what tax documents you will receive at the end of the fiscal year. You may get those documents depending on which brokerage you have.

However, this doesn’t mean that you shouldn’t learn as you prepare for the next 12 months.

When it comes to filing, knowing where to find them can help you save time and effort.

Speak To A Tax Professional

Talking to a certified tax professional if you have any questions regarding filings, deductions or anything else is a good idea. Only certified tax professionals can provide tax advice.

Consider Your Family’s Financial Well-being

Your finances are not isolated. Families’ finances are also not isolated.

You can make sure that your financial planning positively affects the financial well-being of your family members, whether you are married, have children, or support them.

Examine your insurance policies.

You probably have a number of insurance plans such as life insurance, health insurance, and dental insurance. It’s a good time to review your financial situation for the year.

If you include this step in your year-end financial plan, be sure to talk with any family members who have the same policies.

Contribute to the custodial account of your children.

Your future has been in your hands for the past year. If you have children, you can also help them to build their future.

A custodial account is free of income, contribution, or withdrawal limits, and you can often make investments in a wide range of assets. This allows you to save for your children’s future, regardless of whether it is college or buying a car.

Consider making year-end contributions if you have one. Many banks and brokerages offer custodial accounts for parents who have children. We will soon, too.

Set Your 2022 Financial Goals

Although this might seem like a separate task, setting 2022 goals can help you keep track of your financial planning.

These goals will help you to prioritize the actions and decisions that you make over the next year. They can also be a guideline in your overall plan. You’re just starting to set goals

  • Reexamine your long-term (> 10 years) and medium-term (> 10 years).
  • You can set short-term goals for the next year (months, a year, or more).
  • Your goals should be prioritized based on your needs and desires. One need could be to save for retirement while another might be to invest in a new vehicle.
  • You can set goals and target dates. You may already have a year in your mind if you are saving for retirement.
  • Depending on your goal, your progress may be counted.

Thank you

You made 2021 memorable by reading this. We are proud of all the milestones that we have achieved this year.

This post was written by All Seasons Wealth. At All Seasons Wealth, we provide expert advice and emphasize the importance of creating in-house portfolios to personalize your strategy for asset management, financial planning, and cash management. We utilize research and perform market analysis to provide you with a Financial advisor in Tampa. No matter your needs, we can work with you to develop a consulting solution tailored to you.

Any opinions are those of All Seasons Wealth and not necessarily those of RJFS or Raymond James. Investing involves risk and you may incur a profit or loss regardless of the strategy selected. Investing involves risk and you may incur a profit or loss regardless of the strategy selected. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment. Past performance may not be indicative of future results.

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