It might have felt like yesterday when we were preparing for the start of the school year and having summer picnics. But as of right now, we’re actually in the last few days of September, and the last quarter of 2022 is drawing near. So now is the time to concentrate on year-end financial issues and complete crucial tasks that might prepare you well for 2023. Here are some crucial decisions you need to make over the coming months that you shouldn’t put off.
1. Increase your emergency fund
Although many financial experts are issuing warnings, we cannot state with certainty that a recession will occur in 2023. Increasing your emergency fund is an excellent idea so you’ll have enough of money in your savings account to draw on if the economy worsens and your employment is threatened.
In actuality, you want to make sure that your savings account has at least three months’ worth of necessary expenses. Some financial professionals would even advise you that, in these unpredictable times, you should have an emergency fund with eight to twelve months’ worth of expenses.
2. Boost your 401k (k)
This year, the maximum contribution to 401(k) plans is $20,500 for participants under the age of 50 and $27,000 for those over 50. As a result, it may not be possible to max out your 401(k), which is understandable.
However, it doesn’t imply that you can’t attempt to slip extra money into your retirement account. Additionally, you should make an effort to make enough contributions from your own income to qualify for your employer’s full 401(k) match.
However, don’t put off increasing your 401(k) contributions for too long. You should submit that request long before the end of the year since your benefits or payroll coordinator might require time to handle it since such deductions are made directly from your paycheck.
3. Utilize your FSA
Do you have funds in a flexible spending account? You could only have until December 31 to spend your money before you risk losing it. While some plans provide an extension or the carrying over of certain funds, your plan might not (though it’s still wise to double-check).
Consider some of the doctor’s visits you’ve been putting off and begin making plans for them. Consider renewing longer-term prescriptions or purchasing new eyewear to use up your remaining balance.
4. Pay off expensive debt
Do you have credit card debt? That debt may become more costly for you if the Federal Reserve continues to raise interest rates as a strategy to combat inflation. And you won’t want that hanging over your head if a recession occurs the next year.
Instead, examine your spending to see if there are any areas where you can generate savings and pay more on your debt. You may also think about starting a temporary side business to make additional money.
5. Discuss taxes with a tax expert
In 2022, your income could have changed. Or perhaps you sold some stocks, inherited some property, or went through another scenario that can have an effect on your taxes.
If you haven’t already, now is an excellent opportunity to schedule a consultation with a tax expert. That individual might be able to provide you with some advice you can use during the three following months to lessen your tax burden and prevent incurring a hefty IRS charge when you submit your 2022 taxes in 2023.
We might find it difficult to comprehend how close 2023 is now. However, if you take these important steps before 2022 comes to an end, you can find yourself in a lot better and more secure financial situation the following year.