As we approach the end of 2023, we must prepare for the upcoming year by securing our financial health. The experts at Legacy Private Trust Company have compiled a comprehensive checklist for year-end financial planning, ensuring you enter the new year with a robust and well-informed financial strategy. This guide focuses on critical areas to “winterize” your finances, enhancing your financial understanding and readiness.
Understanding and Managing Seasonal Expenses
The holiday season often brings unexpected expenses. While many may have completed their holiday shopping early due to shipping delays and product shortages, other seasonal costs still loom. It’s essential to budget for holiday gatherings, gratuities for service providers, and the expenses associated with winterizing recreational vehicles and properties. Accurately accounting for these expenses is vital to maintain a balanced annual budget.
Maximizing Charitable Contributions
End-of-year charitable giving not only supports causes you believe in but also offers tax benefits. Donating to IRS-approved nonprofit organizations can significantly reduce your taxable income. Ensure you keep all donation receipts for tax purposes. This time of year is ideal for reflecting on the impact of your giving and aligning it with your financial goals.
Enhancing Retirement Savings
Retirement planning is an ongoing process, and the end of the year is an excellent opportunity to maximize contributions to IRAs and 401(k) plans. The contribution limits for 2023 are $6,500 for IRAs ($7,500 for those aged 50 and above) and $22,500 for 401(k)s. Reviewing and potentially increasing your contributions, along with checking employer-matching schemes, can bolster your retirement savings significantly.
Credit Report Vigilance
More than a third of Americans have found errors in their credit reports. These inaccuracies can lead to a damaged credit score, loan denials, and incorrect debt collections, impacting various financial aspects. Regularly reviewing your credit report and rectifying any errors, despite the potentially lengthy process, is crucial to avoid these financial setbacks.
Crafting Effective and Achievable Goals
New Year’s financial resolutions are often viewed skeptically due to their perceived unattainability. However, setting SMART (Specific, Measurable, Achievable, Relevant, and Timely) goals can transform these resolutions into effective tools for financial improvement. Consider upcoming life events, such as purchasing a home or a vehicle, or personal milestones like marriage, when setting these goals.
Estate Planning Review
The holiday season, a time of family gatherings, is an apt period to reflect on estate planning. Ensure that your estate plan is updated and accurately reflects your wishes for your beneficiaries. An up-to-date estate plan guarantees that your loved ones are financially taken care of according to your intentions.
Engaging in Financial Conversations
Understanding your financial situation is vital, but if you have a partner or children, their influence on your financial plan is significant. Engage in meaningful discussions with your partner to align your financial goals and hold each other accountable. The holidays also present an opportunity for financial education for children, instilling in them valuable financial habits and understanding.
While the year-end can be hectic, dedicating time to these financial tasks can set the foundation for a prosperous 2023. Legacy Private Trust Company is committed to aiding clients in visualizing and achieving their future goals, including celebrating successes, enjoying special moments, and building a lasting family legacy. Our financial planning services are tailored to your unique goals, crafting a path towards their realization.
If you are a Legacy client and have questions, please do not hesitate to contact your Legacy advisor. If you are not a Legacy client and are interested in learning more about our approach to personalized wealth management, please contact us at 920.967.5020 or connect@lptrust.com.
This newsletter is provided for informational purposes only.
It is not intended as legal, accounting, or financial planning advice.
