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Hard as it may be to believe, we have just six weeks left in 2021. And, as always, when we reach this time of year, I’m reflecting on what I’ve accomplished since January and thinking about what I’d like to do with my money in the months to come.
If you’re feeling similarly, now is a good time to check in with your finances and plan any changes you might want to make next year, says Sonya Mughal, CEO of Bailard, an independent boutique wealth and asset management firm in the Bay Area.
“Financial checkups should be treated the same way as an annual [checkup] at the doctor,” Mughal says. “Sometimes we forget to make the time, but it’s critical to touch base with yourself, your family and your advisor.”
With that in mind, here are a few tasks advisors recommend tackling as part of your financial checkup before the start of 2022.
1. Review 2021 spending
Set aside an hour or two to go through your 2021 spending in all categories, says Wayne Maslyk, a certified financial planner and president and CEO of Ohio-based Great Lakes Benefits & Wealth Management. Are you spending as planned? If not, you may need to make a fresh budget for the new year.
“This is a good baseline for planning for the year to come,” says Maslyk.
Record your monthly expenses on a Google doc or in an app like Mint to make listing out your expenses and forming a new budget easier.
2. Use up FSA funds
Normally, you have to spend any money you contribute to a flexible spending account on qualified medical expenses in the year that you contribute it, or you’ll lose it (although some employers let you roll over up to $550).
That said, the rules changed this year. Because of Covid-19, some employers may allow their employees to roll over their full balances into 2022. If you’re not sure whether or not your employer is one of them, check with your manager or benefits department.
If your employer isn’t letting you roll everything over, click here for some ideas for spending down any excess funds.
3. Donate to charity
This year, the IRS is allowing all taxpayers, even those taking the standard deduction, to deduct $300 in charitable contributions from their taxes (typically, you can only do this if you itemize your deductions). If you plan to donate during the holiday season, or you’ve been donating throughout the year, you can get a small tax break.
“Donating to charity can be a great way to save money on taxes,” Tony Molina, certified public accountant and product evangelist at Wealthfront, says. “…….
Source: https://www.cnbc.com/2021/11/17/use-this-checklist-to-get-your-finances-in-order-before-2022.html
