Greg McBride’s 2023 financial checklist: 15 tasks to complete by the end of the year

This last year has been financially challenging for households across the country. Between inflation, high interest rates, diminishing savings and rising debt, Americans are recovering from brutal economic headwinds.

If your savings and investments dwindled in 2023, it may take a while to catch up. More than half (60 percent) of U.S. adults say they’re behind where they should be when it comes to emergency savings, according to an October 2023 Bankrate survey. Nearly one-third (31 percent) of those people who feel behind think it will take one to three years to get back on track.

However, there’s some cause to ring in the new year with optimism: The Federal Reserve did not raise interest rates in its most recent Dec. 12-13 meeting, and financial markets rebounded throughout 2023. Also, inflation isn’t as high as it was last year, and the odds of the U.S. falling into a recession are growing slimmer.

As you set goals for 2024, take this time to reflect and make financial plans for next year. Maybe you want to pay off debt, rebuild your emergency savings, build a budget for the first time or diversify your investments. Whatever your goals are, Bankrate’s here to help. Bankrate Chief Financial Analyst Greg McBride, CFA, has a financial checklist that will help you start 2024 on the right financial foot.

Bankrate’s end-of-2023 insights on American personal finances

Greg McBride’s financial checklist for the end of 2023

1. Make a budget and review your spending

The past couple of years have been full of changes, but also plenty of inflation. Taking all this into account, there’s a good chance your monthly budget — and perhaps some of your spending habits — have changed as well, which means it’s time to evaluate where your money is going.

“Rising prices may have soaked up whatever additional income came from your last pay increase, leaving you wondering where all the money is going,” McBride says. “Make a monthly budget for 2024 and resolve to track your spending against it throughout the year. You may need to make adjustments during the year as certain expenses increase and that may require cutting back in another area. Calibrate your spending with your income, and any month you spend less than budgeted, transfer the difference into savings.”

2. Check your progress on paying down debt

“How much debt do you have relative to the beginning of the year? Congratulations if you’ve made steady progress on paying it down, and if you’ve gone in the other direction, make a game plan to pay down debt over the next year.” McBride says.

To get closer to paying off your debt, McBride suggests looking for sources of additional income, even if it’s just temporary, and putting that money toward your debt. If you have credit card debt, look into a 0 percent or another low-rate balance transfer offer that can rescue you from 20 percent credit card rates and propel you down the path to paying off the debt once and for all.

These are just two potential strategies for accelerating your debt repayment, but of course, everyone’s plan may look different depending on your current financial situation.

3. Review your savings progress and set a financial plan for 2024

A key factor in any strong financial plan is having savings to fall back on in an emergency. You may have had to dip into your emergency fund recently, and that’s OK (that’s what it’s there for). Now, it’s time to focus on how you’re going to replenish or grow your savings in 2024.

“Add up the amount you’ve contributed to your retirement accounts, 529 college savings plans, savings accounts and other investment accounts and subtract out any withdrawals taken during the year.” McBride says. “Set goals for 2024 and put the plan into action by increasing your workplace 401(k) plan contributions, setting up a direct deposit from your paycheck into a dedicated savings account and arranging for automatic transfers into an IRA and/or 529 college savings account.”

4. Contribute to your 401(k) by Dec. 31

If you’re planning to max out your 401(k) for 2023, mark your calendar for Dec. 31, as this is the last chance to do so.

If you’re fortunate enough to receive a holiday or year-end bonus, you may want to consider earmarking as much as you can toward your 401(k) plan, McBride says. Additionally, if your company offers a match that you haven’t maxed out, do so before it’s too late.

5. Consider a Roth conversion

Even with a strong rebound from a bear market in 2022, your retirement account may not have fully recovered. McBride says to consider taking advantage by converting some of your pretax retirement assets, such as a traditional IRA, into a Roth IRA.

“Be advised that converting will trigger taxes on any contributions not already taxed, so be sure to consult your tax advisor,” McBride says.

While there are income limits on being able to contribute directly to a Roth IRA, there are no income limitations prohibiting you from converting pre-tax retirement assets into a Roth IRA.

6. Review your asset allocation and rebalance your portfolio

Financial markets have rebounded this year, but some investments moreso than others, so your investment mix may need some attention.

“Taking the opportunity to rebalance back to your intended mix of stocks, bonds, cash and alternative investments means lightening up on things that have fared better and adding to asset classes that haven’t performed as well this year,” McBride says. “This also enforces the discipline of ‘buying low’ and ‘selling high.’”

7. Review your beneficiaries

Adding a beneficiary to your accounts is critical to ensure your assets will go to the person you intended them to. Additionally, it’s important to note that beneficiaries trump wills, so make sure the two documents are aligned in their directives.

“If you haven’t looked at it in a while or especially if there has been a change in family dynamics such as a marriage or divorce, review the beneficiary designation on your life insurance and retirement accounts to make sure it reflects your current intentions,” McBride says.

8. Harvest tax losses

Did you know that you can write off investment losses? The IRS refers to these as capital losses to your income taxes, which reduces your taxable income and nets you a small tax break in the process.

“If you have losing stock positions in a taxable account and they no longer fit your investment needs, consider selling them to offset other gains you’ve taken this year. If you haven’t realized any gains, the tax loss can be used to offset up to $3,000 of ordinary income and any unused losses can be carried forward to next year,” McBride says.

These losses must be realized, meaning you have sold the stock, in order to qualify for the deduction. Additionally, this has to be done before the final trading day of the year, Dec. 29.

9. Check your flexible spending account balance

If you take advantage of a flexible spending account (FSA) offered by your employer, check your balance and see how much you have left to spend because these balances are “use it or lose it.”

“Many employers offer a grace period until mid-March, giving you an additional two and a half months to use up the money set aside this year, but if not, you will need to exhaust the funds by Dec. 31 to avoid any forfeiture,” McBride says.

10. Complete open enrollment and select your employer benefits

The fourth quarter typically marks the beginning of open enrollment, which is when employees can select their benefits for the upcoming year. If you haven’t already, make it a priority to complete your employer’s open enrollment so that you can secure benefits for 2024 that fit your needs.

If you miss out on open enrollment, you will be stuck with the selections from the previous year or no benefits at all.

“Don’t overlook this opportunity to make any changes to your benefits, such as adding or removing a spouse or significant other,” McBride says. “Consider utilizing a flexible spending account to pay for next year’s health care, dependent care or transit costs. This saves you money by allowing you to pay with pretax dollars. Think of it as getting a discount equal to your tax bracket.”

11. Get a free copy of your credit report

Have you checked your credit report lately? If you answered no, check to make sure that everything’s how it should be.

“Regularly checking your credit report is a great way to spot errors or evidence of identity theft,” McBride says. “Knowing what is on your credit report and that everything is correct is important when going to apply for a loan, rent an apartment or even change insurance carriers.”

You can get a free credit report annually at AnnualCreditReport.com. Additionally, most credit card companies offer some sort of credit score monitor. These scores may be slightly different than what’s on your official credit report; nonetheless, they’re a good free tool for regularly monitoring your credit.

12. Pay down your credit card debt

Credit card APRs have soared this year, with the average rate approaching 21 percent.

“Credit card debt is the most expensive debt most households have, so put some urgency behind the efforts to get these balances paid off,” McBride says. “Paying down a 21 percent credit card balance is like earning a 21 percent return on your money — without taking any risk.”

You can take a few approaches to paying off your credit card debt, but a good rule of thumb is always to try and pay off the debt with the highest interest rate first.

13. Review your credit card benefits and reward offers

If you haven’t paid attention, you might be missing out on untapped opportunities to save money offered by the cards in your wallet — perks like extra cash back on groceries and food delivery, and free access to premium apps like Calm, Spotify or GrubHub.

“Check your cards and make sure you’re aware of category spending payouts that have changed and are using the right card for those expenditures,” McBride says. “Particularly around the holidays, some credit cards may offer an added bonus if you meet a certain spending threshold. If so, consider shifting spending from other cards onto a card where that total spending can net some extra cash or rewards points — but only if you’re paying the balance in full, every month.”

14. Apply for a new credit card and save money

If you have a good credit score, taking advantage of a new good credit card offer can help you save money in a couple of ways:

• Scoring a generous sign-up bonus (roughly worth $200-$900).
• Taking advantage of zero-interest intro periods for up to 21 months, which will allow you to pay for big items or holiday purchases without incurring interest.

“Use credit cards to your advantage, not the card issuer’s advantage,” McBride says. “Pay the balance in full every month. No-annual-fee-rewards cards paying two percent back, or more in some categories, can put some of that spending back in your pocket.”

When shopping for a new credit card, look for one whose earning categories fit your spending habits. Also, look into your likelihood of being approved for the card. Tools like Bankrate’s CardMatch give you access to prequalified offers without affecting your score and can help with the selection process.

15. Review your insurance policies

Take a look at your home, auto and life insurance policies to ensure they still meet your needs. Inflation has caused insurance rates to rise, but that also means that the costs to settle claims are higher because materials and labor cost more. The end of the year is a great time to check to see if you need more coverage.

You may need to adjust your deductible, too. Inflation may have changed your financial situation, so you may no longer be able to afford a higher deductible or maybe you have the savings to warrant bumping your deductible up a bit.

“Shop around to make sure you’re still getting the best deal,” McBride says. “Don’t think that because your home and auto premiums have been going up each year that every carrier will charge the same price.”

Bottom line

The U.S. has weathered a lot of economic uncertainty over the past several years, and there is plenty of uncertainty about what lies ahead. However, by understanding your current financial picture, you can set yourself on a secure path in 2024.

During breaks from making your 2024 budget, don’t forget to give yourself the space to congratulate yourself on the end of another year. Setting yourself up for financial wellness is no small feat, and taking any step can be a huge jump to setting up your future.

• Methodology

  Bankrate commissioned YouGov Plc to conduct the survey on emergency savings. All figures, unless otherwise stated, are from YouGov Plc.  Total sample size was 2496 adults. Fieldwork was undertaken between 20th – 22nd September 2023.  The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+).
  
  Bankrate commissioned YouGov Plc to conduct the survey on retirement savings. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,527 US adults, of whom 1,301 are working full-time, part-time or temporarily unemployed. Fieldwork was undertaken between 23rd – 25th August 2023. The survey was carried out online. The figures have been weighted and are representative of all US adults (aged 18+). The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.
  
  Bankrate commissioned YouGov Plc to conduct the survey on student loan borrowers. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 3,684 U.S. adults, of whom 1,400 have ever had a student loan and 588 currently have student loan debt. Fieldwork was undertaken on June 12-15, 2023. The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.
  
  Bankrate commissioned YouGov Plc to conduct the survey on credit card debt. This survey was conducted using an online email interview administered to members of the YouGov Plc panel of individuals who have agreed to take part in surveys. All figures, unless otherwise stated, are from YouGov. Total sample size was 2,486 adults, among whom 1,919 were cardholders and 891 carry a balance month to month. Fieldwork was undertaken between July 6 and July 10, 2023. The figures have been weighted and are representative of all U.S. adults (ages 18+).
  
  Bankrate commissioned YouGov Plc to conduct the survey on financial freedom. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,521 U.S. adults. Fieldwork was undertaken June 5-7, 2023. The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.