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10 Helpful Financial Moves To Make Every Year

The end of the year is always the best time to reflect and plan. I’d like to share several financial moves you should make before the new year in order to protect your wealth and hopefully grow your wealth in a risk-adjusted manner next year.

Those of us who invested in stocks, real estate, and many other asset classes this year should be feeling fortunate. Unfortunately, the good times seldom last forever.

Never forget the Armageddon days of the 1997 Asian Financial Crisis, the 2000 dotcom implosion, and the 2008 global financial crisis. Those of you who haven’t been investing at all better get ready to deploy capital when chaos returns, or else inflation will eat your wealth alive.

If you just started investing in the past year, lucky you! Don’t worry. Your beat down will happen eventually. Losing money is an inevitably if you invest in risk assets. But like with most beat downs, things tend to get better over time.

Here are the top 10 wise financial moves you should make this year. This goes a little beyond just maxing out your tax-advantage retirement accounts.

#1 Financial Move: Review your asset allocation

One of the most important financial moves is review your asset allocation. Setting and forgetting it is not a good strategy if you want to stay properly diversified.

For example, you might deploy a 50% equities, 50% bonds asset allocation. But if your equities climb 35% while your bonds decline 10%, and you want a 50/50 balance, you’re out of alignment because your portfolio is now 60% equities and 40% bonds.

Investors should rebalance at least twice a year, no matter how small the rebalance is. Taking the time to rebalance helps focus your attention on your investments so they don’t grow too far out of whack.

For my public investment portfolio, I’m following my Financial Samurai Asset Allocation Model for my age of 85% equities / 15% fixed income (all muni bonds and Treasuries). You can click on the post to see three other asset allocation models tailored towards your risk tolerance.

Financial Samurai asset allocation model for stocks and bonds by age

#2 Financial Move: Review your income and spending

You’ll be surprised by how much you’ve spent and how much you THINK you’ve spent. Chances are high you’re spending more than you realize, which is a detriment to your net worth building goal.

It’s the same idea as withdrawing money from an ATM machine and wondering where all the cash went a couple days later. Tally up your total annual income and spending amounts. Then divide the figures by 12 to make the numbers more granular. Adjust your spending accordingly.

I’m more focused on making more money because there’s only so much I can save. I’ve set detailed limits for spending on housing, food, transportation, entertainment, travel, etc, and rolled these figures up to a monthly figure I will not cross. 

It’s a thrill to stick to a set spending number while trying to earn as much as possible beyond that threshold. The spending number is high enough where I feel free, but responsible with my money. 

Here’s an example of a spending snapshot e-mail you’ll receive each month if you sign up and link your accounts with Empower, a free wealth management app. Empower includes investing as a type of expense, which I like. It helps make spending on investments a positive.

Track your spending with Empower

#3 Financial Move: Declutter and donate to charity

Not only is donating good for people in need, you get to declutter your house and get a tax write-off up to $500 per donation without having to fill out a form to say where the item came from.

We all tend to accumulate a bunch of stuff over time. It feels fantastic to get rid of “excess inventory” so that people with low inventory can be helped. You can also donate other assets such as stocks, your car, and other valuable goods as well. Consider setting up a Donor Advised Fund.

Also consider decluttering your lifestyle. Our finances and lifestyles have a tendency to get more complicated with age. As you start to approach retirement, consider simplifying for less stress and greater happiness. Minimalism and early retirement go perfectly together.

When I last moved houses, I donated about twelve bags of clothing to Goodwill, The Salvation Army, and SF Smiles. It felt great to declutter and help others.

#4 Financial Move: Update your resume

Now is the time to update your resume and make sure it’s the best looking document on your computer. You’ll be surprised by how much you’ve accomplished over a year that you can add to your resume.

Make different versions of your resume for different types of industries or jobs you’re eying. End of January through June is peak job hunting season.

I’ve updated my resume in anticipation of going back to work in 2024. The last time I updated my resume was in 2018 and a lot has happened since, including writing a national bestseller, Buy This Not That.

#5 Financial Move: Keep yourself and your family safe

I don’t care if you are worth $5 million liquid. Some random illness could wipe you out if you don’t have the appropriate insurance. Besides health care, please make sure your housing insurance, car insurance, and personal property insurance coverage are enough.

If you have lots of assets that go beyond what your housing and car insurance can cover, also get an umbrella policy. The linked article explains what an umbrella policy is and how much it may cost.

Finally, if you have debt and dependents, I suggest getting an affordable term life insurance policy. The closer to age 30 you can get a 30-year term policy, the better.

I recently raised my umbrella policy by $1 million due to the bull market. In addition, both my wife and I got matching 20-year term policies during the pandemic with Policygenius. After we did, we both felt a huge amount of relief. I thought I was priced out forever given I mistakenly only got a 10-year term policy at age 35, two years before I had my first child.

#6 Financial Move: Review your estate

Along the lines of financial moves to keep your loved ones safe, prioritize estate planning. At least have a will, or have an updated will if your financial circumstances have significantly changed.

You don’t want to accumulate $20 million, die, and then cause your entire immediate and extended family to start a civil war because they don’t know who is getting your millions. Money brings out people’s evil side, especially for those who’ve never had a lot of money.

Do your heirs a favor and be organized. Create a death file and inform your beneficiaries where all of your most important documents and instructions are.

Make things as easy as possible for them to settle your estate. Here’s a very helpful checklist on preparing for death – your loved ones will thank you.

When I first wrote this post, I only had a living will. Fortunately, my wife and I met with an estate planning attorney after our son was born and we got our estate plan in order. Not only did we set up revocable living trusts, we also have death files with detailed instructions.

#7 Financial Move: Forecast your future tax liabilities

I’ve already written an extensive piece about year-end tax moves to make. Now you must plan for your future tax liabilities by doing a pro formal analysis on your expected income and expenses.

If you invest in a lot of private funds, then take the time to estimate what your future distributions could be. Is a company your fund invested in potentially planning on IPOing? Is your fund in the last year of its estimated life cycle? If so, you may have much more investment income coming due, which may increase your overall taxes.

The greater your expected investment income, the less you should earn in consulting or day job income to reduce your tax liability. The more you should max out your Solo 401(k), SEP IRA, traditional IRA, and regular 401(k) as well. The deadline to contribute to the employee portion of the 401(k) is December 31.

I expect some capital gains taxes after selling stocks in 2023. In addition, one of my private real estate funds is in its last two years of its lifecycle. Therefore, I expected to receive some significant distributions. With a potential new consulting job, I will max out my Solo 401(k) and cut my FS salary.

# 8 Financial Move: Tie up loose ends

Use the end of the year to finish strong by completing all the things you should have completed already. The idea is to start the new year with the least amount of baggage possible so you have maximum momentum to achieve your new goals.

Have you used up all your gift cards and expiring points? Have you sold some stock losers for tax-loss harvesting? What about selling all your excess inventory of stuff? Maximize what you have and get rid of the baggage.

One of my loose ends is hanging up all our pictures and art at our new house. I’d like to decorate my office so the background looks good on video calls. My other loose end is getting birth and death certificates of my relatives to prove my children have Hawaiian ancestry.

# 9 Financial Move: Run your investment portfolio through a fee checker

Do you know why some money managers are so rich? It’s because they charge a tremendous amount of fees. It’s frustrating when your employer only offers actively run mutual funds with high fees. But you must continue to contribute as much to your pre-tax retirement accounts as much as possible.

At least once a year I run my investment portfolios through Empower’s Retirement Fee Analyzer. Just link your investment accounts and click on the Investing tab on the top right and then click Retirement Fee Analyzer.

I’ve optimized my two portfolios so that my annual fee is estimated at only 0.18% compared to the benchmark of 0.5% due to my selection of ETFs, Index Funds, and specific stocks. The other cool feature is the Investment Checkup feature that shows your current vs. target allocation. 

Retirement Fee Analyzer Personal Capital

#10 Financial Move: Rekindle neglected relationships

Do you know what happens at the beginning of each year for working professionals? They get inundated with LinkedIn requests and messages from friends on LinkedIn, FB, and wherever. Why? Because more people are networking to find a new job.

This is problematic because people are only trying to connect with you when they need something. Although this is natural, it is not ideal. It’s better to reach out to people throughout the year, check in, maintain relationships, and then potentially ask for help when help is needed.

Spend time looking through your connections you’ve neglected and at least drop a “happy holidays” or “happy new year” note and a brief summary of what you’ve been up to.

I’m going to spend at least two hours going through my connections and wish them well for the holidays. Life always gets busy and we tend to neglect the majority of people we know.

I used to send out over a hundred holiday cards a year when I was working. Today, that number is sadly under 20. People tend to help people who’ve been there over the long term.

BONUS: Work On Your X Factor

Your X Factor is something you do outside of work that could change your life for the better.

The world is chaotic but don’t forget to set aside some quiet time to think big. I’m not talking about losing five pounds or getting a 10% raise that won’t do much for your life.

Instead, I’m talking about potentially life-altering objectives. Things such as: moving to a different city/state/country, starting a business, finding the love of your life, getting that degree, and more.

I’m working on my X Factor by writing another book and building out my podcast. You never know what opportunities may arise from putting your creative work out there.

Visualize Success With Your Financial Moves

There is a reason why people create vision boards. They work. Everyone should visualize themselves 12 months from now in a more successful financial position. You’re more likely to complete the financial moves above if you expect success.

For example, if you no longer want to do your craptastic job that requires no thinking, visualize yourself doing something new and exciting with a different company.

If you no longer want to be in a dull relationship with a partner who takes you for granted, visualize yourself taking an amazing vacation with someone else.

Tired of living paycheck-to-paycheck? Visualize yourself rocking an enormous bank account due to the positive steps you’ve taken to create wealth.

If you don’t believe in yourself you’ve already failed.

Readers, what other financial moves do you recommend people do every year at least once? 

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