Getting your finances back on track
If inflation and interest rates have put a strain on your financial wellbeing, the fall is a great time to get your finances back on track to finish out the year strong. Barry Bigelow from Great Waters Financial has key money moves to take control of your finances.
Every season brings changes to how you spend money. Summertime means spending more on outdoor activities and family vacations, while the fall brings other priorities. Back-to-school expenses for children and college students add up between tuition and supplies. For homeowners, fall is the time to prepare for winter, so home repairs and updates become a priority. The holidays will be here before we know it, so it’s a great time to plan ahead for all the expenses that come along with the season. As the year winds down, tax strategy also becomes a priority to make sure you’re set up for success when it’s time to file.
Pay attention to how much your W-4 is telling your employer to withhold, and make sure you’re on track with your claiming strategy. If you’re withholding too much or not enough, you can update the terms of your W-4. Increasing your withholding could potentially help you avoid a huge tax bill come filing season. Decreasing your withholding can put more money in your savings to grow over time instead of giving Uncle Sam an interest-free loan.
Be aware of the balance on your FSA, HRA and other types of employer-sponsored savings accounts. Funds in your Health Savings Account can roll over into 2023, but if you still have money in an HRA or FSA, some or all of those funds may disappear if they go unused. Look into how much you can transfer into next year and make sure to spend anything that can’t be rolled over.
Max out your contributions to your 401(k) and any other retirement accounts. You can put up to $20,500 in a 401(k), and if you’re 50 years of age or older, you can use catch-up contributions to add an additional $6,500 to your savings. A lot of companies give out end-of-year bonuses. Instead of spending that money, consider putting it into your 401(k) or another retirement account. It’s tempting to spend that money now, but saving for a better future will help you achieve long-term satisfaction.
If you’re planning to join in on the festivities in the coming months, set your expectations now. Make a list of all the expenses you have to plan for, including food for dinner parties, gas for road trips to see family and presents for your friends and family. Sometimes it’s helpful to look back at what you spent last year as a guide. You can see where your spending has gone haywire in the past, and better prepare to stick to your budget this year. Last year, holiday spending was up 8.5%, and inflation likely will make shopping even more expensive this year. Before the chaos of the holidays comes, put pen to paper and create a budget to help keep your spending in check.
Ask yourself, “What experiences am I hoping to have in 2023?” Consider the major purchases or expenses that go along with those plans. Do you want to buy a new car? Do you want to go on a family vacation? Do you want to get serious about retirement? If you want to make those experiences happen, you can’t just hope for them. You have to plan for them. Create a savings plan to make sure you can afford your goals, short-term and long-term.