Can you believe the New Year is exactly two weeks away?!? I can't believe we are at the end of the year… and let's just say our personal financial situation isn't anything like we thought it would be at the start of the New Year. Some of you know my husband has been working on his startup for about two years now. We really thought (and got SO close) to it not only getting funded at points, but full on purchased…. literally contracts signed I could almost taste the sweet relief of financial freedom. Alas, here we are with no changes… and if you've ever watched an episode of Silicon Valley, you've seen the financial stress of a start up. Fortunately we made some strong end of year money moves while closing out last year and didn't feel the weight of the financial rollercoaster that is entrepreneurship (which is saying something since we are both entrepreneurs and never have guaranteed money coming in!). 

So today I'm thrilled that Lexington Law sponsored this post on end of year money moves. These are the financial moves that we can all benefit from considering and doing at the end of any year really. The great thing about financial well being, is the more you learn and plan, the easier it is to weather the unexpected. So while we may want to curl up into a ball and avoid what's happening (or not happening) in our bank accounts, lean into the discomfort and take some action before the year is up! The tips in this post can help you close out the year on better financial footing and start the New Year off on even stronger financial ground so you can reach your money goals.

15 End Of Year Money Moves You Need To Make Today

Pull credit reports if you haven’t already

Each year all three of the credit bureaus, TransUnion, Equifax, and Experian, allow you to pull your complete credit report for free. If you haven't already done it for this calendar year, now is the time! Bad credit can end up seriously costing you. You want to review your credit report from each of the bureaus annually to ensure there are no inaccurate, unfair, or unsubstantiated claims. If you find a negative item that doesn't seem right, there could be an error. Contact the consultants at Lexington Law today for your free credit report consultation to see if they can help you with removing those types of negative items.

[RELATED] How Credit Impacts Your Life & What You Can Do About It

Review spending behavior for this past year

The end of the year is always a time for reflection and looking back. The same should be done with your spending. Take this time to review all of your spending behavior over this past year. What categories were higher than you anticipated? Where could you cut back? Did your spending align with your goals? Are you where you hoped you'd be? This big picture overview can be the exact motivation to help you reach your goals and stay on track with your budget in the New Year. 

Maximize your Emergency Fund/Savings

Ideally we'd all have an emergency fund. If you have a traditional employer, it'd have 3-6 months worth of income in there, and if you're self employed, it'd have 6-12 months of living expenses in it. An emergency fund helps you weather the storms and deal with the unexpected. Since you need that money liquid (cash ready), you can't put it into an investment account or CD or something. However, that doesn't mean the money should just sit there collecting dust.

Instead, make sure you have it in a high yield savings account. The current national average on a savings account is .09%; so chances are yours isn't earning very much if you fall into that category. However, with the rise of digital banks, you can now set up a high yield savings account with rates currently at 1.90% APY!

I want to note: these rates vary, I think I started 2019 and my rate was like 2.2% APY and went as high as 2.8% APY at one point. The rates fluctuate based off the market, but typically are at least 15 times higher than the national average. At 1.90% APY you'd earn $19 for every $1,000 in the account, compared to .9 at your national average! HELLO FREE MONEY! 

Create a debt repayment strategy

Once your emergency fund is where you want it to be, if you have any debt, it's vital to get on a debt repayment strategy. I suggest doing the emergency fund first, to ensure you stay on track once you start chipping away at your debt. One of the major keys to successfully paying off debt is motivation.

For instance, it's like you start going to the gym, you do great for a few days, but then you get really sore. You decide to take a few days off… then a few days turns into a week… then two weeks, and so on. Something similar can happen when it comes to paying off debt. You start making progress, feel great, but then your car needs a repair so you have to divert your debt repayment money to the car. It takes you a month to stabilize your finances again, but your progress on the debt feels “wiped out” as the interest bumped up the total sum and you lose all motivation. 

You can read more about my two favorite debt repayment strategies here and I talk loads more about staying motivated and on track! 

[RELATED] 12 Mistakes People Make When Paying Off Debt

Review all of your recurring subscriptions

While you go through your spending for the previous year, keep a running list of all the subscriptions you are paying for. Some are billed monthly so they are easy to spot, others may be billed quarterly or annually. Look through your list of recurring subscriptions and cancel any that you aren't using. 

Max out retirement accounts

In reviewing your spending, I hope you took the time to look at your retirement account contributions! So here's the deal: you can open an individual retirement account (IRA) with as little as $50. There's no minimum requirement for continuous deposits either. In other words, once your emergency fund is where you want it and your debt is under control, there's no reason to not open one! 

Moreover, if you have a traditional employer who offers 401k matching, that's free money! In other words, a TOP priority before the end of the year should be to put in the minimum amount into that 401k to get the “free money!”

It works differently for every employer but here's a pretty common example with made up numbers:

An employer agrees to match the first $5k you put into your 401k each year. Meaning you put $1k in and they put $1k in to match; and they'll do this up to the first $5k you contribute for the year! If you're employer offers this and you haven't reached their cap, skip the holiday gifts and make that a top priority instead! 

Now if you don't have an awesome 401k matching set up like I mentioned don't freak out! Lexington Law shares 5 Alternatives To 401k's here.

The maximum you can contribute to an IRA for 2019 if you're under the age of 50 is $6,000! The closer you get to maxing that out the better, as shown in this graph which basically shows three people (A, B, and C) all who started contributing the exact same dollar amount to their retirement account at different ages (A at 20, B at 30, and C at 40). On the Y axis, you'll see the amount of money they each had in their retirement account at 60. Thanks to compounding interest, even if the 20 year old and the 40 year old put in the exact same amount of money, the 40 year old would never be able to catch up. So start as soon as you're financially able to. 

If you feel behind in your retirement contributions…

Lexington Law put together this helpful guide for catching up on your retirement contributions; read it here. If you feel behind on your retirement contributions, don't feel defeated! You can still take action towards a better retirement. In fact, I'll be sharing loads more tips around financial independence and retirement in the New Year so stay tuned! 

Automate retirement contributions

I just explained the importance of putting money towards retirement above. Now make it easy and simply automate it! If your goal is to max out an IRA each year, you can do it as one lump send at the end of the year, or you can set it up as monthly withdrawals. Many argue that monthly withdrawals are better since it hedges your bet a bit with when the money goes into the investment account. In other words, if you do one lump sum at the end of the year and the market is pretty high, and then drops in the New Year, you'll feel that a bit more than someone who had put money in monthly while the market experienced various highs and lows throughout the year.

In my opinion, that's minutiae for you to worry about and the most important thing is to contribute regularly and in a way that doesn't compromise you financially today. Personally, I do monthly contributions because of the hedging my bet thing, but also it ensures I'm prioritizing my retirement, and also allows me to cancel or skip them if I need the cash at some point in the year. If I contributed the lump sum at the start of the year or when getting a tax refund, I may wish I had that money later on in the year if something came up. On the flip side, if I'd waited until December to make the lump contribution, I may not have it because I spent it elsewhere.

Evaluate your tax situation

Oh taxes, they are easily the most overwhelming thing on this list for me personally. So here's a little checklist I go through each year to ensure I'm doing my best:

Do I have everything I need for my CPA?

Are my books balanced, receipts logged, and is everything classified? Truthfully, I do this as a weekly check in but then a big double check at years end. 

Am I clear and on track with my tax withholdings?

In a dream world come tax time, Uncle Sam and each of us would be even. No one would owe anyone anything and we could all go along our merry way. However, if you're getting a big tax refund each year, rather than rejoicing, you may want to review and adjust your withholdings. A nice tax return check each year basically means you've loaned the government money interest-free for the year that should've been in your pocket. Now I ask you: when you've gone to take out a loan, has anyone been so generous as to give it yo our interest-free? …Didn't think so.

You can visit the IRS's website here to estimate tax withholdings. In January it'll switch to the 2020 projections, but feel free to play around with the tool now, even though it's probably too late to make any changes for 2019. 

On the flip side, if you're in my boat (self employed): have you been estimating and paying your quarterly taxes to ensure there are no surprises come April? 

These I don't ask myself, because they don't apply to my financial situation (self employed life), but I know tons of people who this does apply to and you should consider them:

Did I max out my HSA?

In case you didn't know, a health savings account allows you to put money aside for qualifying health expenses totally tax free! Your contribution to the account is tax deductible and when you use the money for qualifying health expenses it's tax free. For 2019, the maximum contribution is $3,500 individually, or $7,000 for family coverage for those under 55. This number is actually going to go up in 2020 too ($3,350 individually, and $7,100 for family), so keep that in mind when you plan for next year! 

Did I use my Annual Gift Exclusion?

Another fun tip: individuals can gift $15,000 per year to another individual totally tax free! So why everyone is so afraid of giving cash for gifts is still a bit beyond me… but that's another post for another time! This is a great way for the gift giver to reduce the amount subject to estate taxes. So if you or your parents are looking to reduce estate taxes and keep the money in the family, this is what you should be taking advantage of! 

If you have kids (or grandparents looking to give a gift), ask them to contribute cash directly or towards a college savings plan (which counts towards the annual gift exemption). 

Did I use my FSA fully?

A flexible spending account (FSA) is different than an HSA and far more strict. FSAs allows money, through an employer, to be contributed tax-free and used tax-free for medical expenses. However, you have to use all the money in the account before the year is over, otherwise you lose it. Some employers will allow you to roll over a maximum of $500, but that's few and far between. So basically, if you contributed the maximum of $2,700 in 2019, and only used $1,000 of it, that's $1,700 you'll never see again unless you use it before year's end! 

Conduct a year end security audit

It's no secret that the holidays bring out an increase in scams, identity thieves, and other financial threats. The end of the year, or the start of the new one, is a great time to conduct a security audit of your digital profile. This can be a simple as changing all of your passwords. You always want to make sure you have a different password for every account, and it helps to frequently change these as we've seen more and more companies with data breaches. My friends at Lexington Law put together this really helpful post with even more tips for conducting a digital security audit. Read it here!

Lexington Law sees the effects of stolen identity all of the time in their work. That's why they're committed to helping people with inaccurate, unsubstantiated, and unfair negative items on their credit profile. The likelihood increases for these types of negative items when you're the victim of identity theft, have medical or student debt, have been on military leave, or divorced. Click here to receive your free credit repair consultation with Lexington Law! 

Goals and budgets for next year

I like to come up with my financial goals for the next year after I've reviewed my spending and before I solidify a budget for the New Year. This gives me a chance to look at where I feel like I've missed the mark or felt unsatisfied in my spending. Maybe I struggled with overspending on things for our new home and wish I would've moved that money towards self care. Or maybe I was so focused on getting out of debt and maxing out an emergency fund, that I began to feel depressed and isolated because I kept telling myself, “things weren't in the budget.” Whatever the case may be, now is a good time to evaluate where you feel you could've done better in creating a fulfilling, well rounded lifestyle and financial profile, and then set your budget for the New Year accordingly. 

Checklist of 15 End Of Year Money Moves You Need To Make Today

1. Pull credit reports if you haven’t already

2. Review spending behavior for this past year

3. Maximize your Emergency Fund/Savings

4. Create a debt repayment strategy

5. Review all of your recurring subscriptions

6. Max out retirement accounts

7. Automate retirement contributions

8. Evaluate your tax situation

9. Do I have everything I need for my CPA?

10. Am I clear and on track with my tax withholdings?

11. Maxed out HSA

12. Did I use my Annual Gift Exclusion?

13. Did I use my FSA fully?

14. Conduct a year end security audit

15. Goals and budgets for next year