Skip to content

The end of the year is an important time to make financial decisions that can have implications for the coming year and years to come.

From your job to your savings and investments to your spending and returns, here are five steps you should consider before December 31 that can help set you up for financial success in 2023:

1. Make sure you didn’t pay too little tax on your 2022 income

Cn0ra |: East Getty Images:

You don’t want to end up paying interest and penalties next year or a big tax bill because not enough tax was deducted from the amount you paid this year. Even if you’ve recently been laid off, it’s important to double check so you don’t get an unexpected tax hit. And if you’re retired, make sure you’ve paid the appropriate tax on your pension withdrawals.

The IRS says the best way to find out if you’re on track to pay the right amount of income tax is to pay the same amount you did in 2021 or, for higher-income taxpayers, maybe a little more. Remember that even if you got a tax refund last year, with no stimulus payment for 2022 and less generous deductions for charitable gifts, you may get a smaller refund in 2023.

More than personal finance.
Employers are bringing back the traditional holiday party
Frustrated workers turn to ‘career relief’
Using pay transparency to negotiate a better salary

You can also do a “rent check” by visiting the Tax Withholding Estimator on the IRS website to check the amount of tax withheld from your paycheck. You may have time to adjust your deductions for the last pay period of the year by filing a new W-4 form with your employer. If it’s too late to correct withholdings that way, or if you’re self-employed, you can send an estimated tax payment directly to the IRS. The fourth quarter payment deadline is Tuesday, January 17, 2023.

2. Increase your 401(k) plan contributions

A 401(k) retirement savings plan is one of the most sought after workplace benefits. You can contribute up to $20,500 to a 401(k) plan in 2022, or up to $27,000 if you’re 50 or older.

If you can’t afford to contribute the maximum amount to your 401(k), many financial advisors say to at least contribute enough to get your employer’s matching contribution, if it’s offered. It’s free money.

Increasing contributions to a traditional 401(k) plan can reduce your adjusted gross income while supplementing your retirement savings. But with one payment term left in 2022, you should make investment changes immediately.

3. Boost your emergency savings

Having easy access to cash to cover unexpected expenses is also important. However, new research from Betterment at Work finds only 59% of workers we currently have an emergency fund, a 7% drop from last year, leaving 41% without any kind of safety net.

With recent layoffs and worries about a looming recession, getting a temporary job can help a lot. A part-time job in retail or a restaurant or paid holiday decorating can help you earn more money for savings.

Federal Reserve interest rate hikes this year have led to higher interest rates for many online-only savings accounts. Some such accounts pay up to 3.5% interest with no minimum balance, according to

4. Plan how you will spend before you buy

If you just can’t afford to save more right now, just make sure you don’t overspend. Figure out how you plan to pay for your holiday shopping before you buy it. Using cash instead of a loan can help you stick to your budget and stay out of debt. Some merchants will charge you less to pay in cash to avoid credit card transaction fees. By paying cash, you can pay 3% less than the purchase price in some cases. Digital payment apps like ApplePay, Venmo, or CashApp can also work like cash payments.

Using a credit card gives you more consumer protection than a debit card, and you can also earn rewards, such as cash back or airline or hotel points. Choose a low-interest card or a card with a 0% interest introductory offer, especially if you think you won’t or won’t be able to pay off your balance in full at the end of the billing cycle.

Strategies for saving more and spending less

Beware of store credit cards. According to, the average retail store credit card alone charges more than 28% interest.

Also, be careful if you use “buy now, pay later” products, which is a popular online shopping option at many retailers. While you can make interest-free purchases, buy-now-pay-later loans aren’t subject to the same regulations as credit or debit cards. There are also fewer purchase protections, including the ability to dispute a charge if you bought a product or service that wasn’t delivered as promised.

5. Think about how you will contribute to charity this year and next

Claiming the charitable deduction this year may be more difficult than in the previous two years. You can no longer automatically tax the above-the-line deduction for cash donations; you must itemize the deductions on your 2022 tax return.

However, most people will likely choose not to opt out because doing so may not offer as big a tax break as the standard deduction. For 2022, the standard deduction is $12,950 for single filers, $19,400 for head of household taxpayers, and $25,900 for married couples filing jointly.



Leave a Reply

Your email address will not be published. Required fields are marked *