7 Financial Planning Steps to Take at the End of the Year

These moves are good to make at any time of the year, but doing them before 2023 arrives can help you enjoy a fresh, confident start to the new year.

The year 2022 spelled out in blocks is changing to 2023.
(Image credit: Getty Images)

The end of the year often has people feeling reflective about the year that they’ve had and contemplative about the year ahead. While you’re thinking about how 2022 treated you, it’s a great time to think about financial steps to take at the end of the year — from reviewing your retirement plan to evaluating how well insured you are — and to take those steps now to start 2023 with your best foot forward.

Financial Step #1: Donate to Charity

The holiday season is synonymous with charitable giving. If you’re in the giving spirit this season, be sure to keep track of your donations and keep your receipts. If you itemize your deductions on your tax return, you can claim those donations to lower your tax bill.

It’s worth noting that a check dated prior to Dec. 31, even if it is cashed in the new year, still counts toward this year’s deduction. The same thing is true for any donations that you charge to your credit card and then pay off next year — they count toward this year’s deduction if the charge was made in 2022. Also, keep in mind that you can gift your stock to charities, avoiding any capital gains for yourself.

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Financial Step #2: Estimate Capital Gains and Other Taxes

Speaking of capital gains, the last year surprised many people with unexpected capital gains. While you may not have that same experience in 2023, it’s a good idea to sit down with a tax professional and a financial adviser to estimate what your tax year might look like so that you can plan ahead, not only for capital gains, but for other estimated taxes. It’s best to be prepared, and potentially to make estimated payments on your taxes if necessary.

Financial Step #3: Consider a Roth Conversion

A Roth IRA conversion might be the right financial move for you this year, depending on your situation. It is a unique year because markets are down, and when they rebound, you’ll end up with more shares that could potentially grow in a tax-free vehicle. A financial planner can help you determine if a conversion is the right move for your situation.

Financial Step #4: Review Your Retirement Plan

The end of the year is the perfect time to sit down and review your retirement savings plan. Are you contributing enough to your 401(k)? Try to contribute enough to at least get an employer match, if your company offers it. If you can, increase your contributions by 1% next year, if you’re not contributing the maximum amount. The maximum amount of contributions for 401(k)s is increasing next year to $22,500, with a $7,500 catchup amount if you’re over the age of 50, so take that into account when you’re planning out your contribution amounts.

Financial Step #5: Check In on FSA Spending and HSA Contributions

Many of us have FSA accounts that remain unspent until the end of the year, and often those accounts are “use it or lose it,” where the money does not roll over into the new year. Use that FSA money on qualified medical expenses during the last few weeks of the year while you still can so that the money isn’t wasted.

For those of you with an HSA, these can be great investment vehicles that last through your retirement, so take a look at how you’re contributing to them.

Financial Step #6: Review Your Insurance and Estate Planning Needs

Your insurance needs and estate planning needs may have changed throughout the year, so it’s a good idea to sit down once a year and review your policies and any estate planning documents to ensure that nothing needs to be updated.

Do you have the necessary insurance coverage that you need for all aspects of your life? Do you have an estate plan, and if so, are the beneficiaries up to date?

You want to be sure all of your estate plan documents are up to date, in good order and in the same location. It’s also a good idea to price out insurance coverage occasionally to make sure that you’re receiving a good price for your coverage.

Financial Step #7: Plan Out Large Expenses and Emergency Funds

The end of the year is the right time to plan ahead for the next year — especially for the large expenses that you may already know are coming. Perhaps you’ll need to buy a new vehicle next year, and you can plan ahead to save for that expense. Or, maybe you know you’ll move next year, and you can save money toward your moving expenses.

It’s also good to make sure that you have enough set aside in an emergency fund. As a general rule of thumb, you want to have three to six months of your living expenses in a liquid account to cover anything unexpected that may happen in your life.

These seven financial steps are good to do at any time, but the end of the year seems fitting for new beginnings and reflecting on your life, so why not start now?

Disclosure: Diversified, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC. A copy of Diversified’s current written disclosure brochure which discusses, among other things, the firm’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. Investments in securities involve risk, including the possible loss of principal. The information on this website is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Andrew Rosen, CFP®, CEP
President, Partner and Financial Adviser, Diversified, LLC

In March 2010, Andrew Rosen joined Diversified, bringing with him nine years of financial industry experience.  As a financial planner, Andrew forges lifelong relationships with clients, coaching them through all stages of life. He has obtained his Series 6, 7 and 63, along with property/casualty and health/life insurance licenses.