Issue #217: Your December to-do list has arrived

Hi y’all —

It’s the holiday season! Allow me to sing you a Dollar Scholar Christmas carol.

*clears throat* 

♫ He’s making a list; he’s checking it twice. He’s gonna find out… what financial tasks he needs to cross off his list before he spends his entire paycheck on presents for Mrs. Claus and stops by the grocery store for reindeer food and holds yet another meeting with the elves and eventually slides into an end-of-year panic. Santa Claus is comiiiing to town! ♪

(Hold for applause.)

Whether you believe in Jolly Old Saint Nick or not, there are 5 things you should put on your December to-do list regardless. Knocking out these money-related tasks now will help you finish 2023 strong and set you up for a strong new year.

Here’s what you need to do before New Year’s Eve:

✅ Fund your 401(k)

The deadline to contribute to your 401(k) for the 2023 tax year is Dec. 31. You can put away up to $22,500, plus an extra $7,500 if you’re age 50 or older. Mark Steber, chief tax information officer at Jackson Hewitt, says to act now if you’re not satisfied with the amount you’ve stashed away for retirement this year so far.

“There’s still plenty of time to look at your 401(k) and make increased contributions through your HR program on the last two or three paychecks,” he says.

Even if you can’t afford to max out your 401(k), it’s important to at least contribute enough to unlock your company match. Otherwise, you’re leaving money on the table.

✅ Spend your FSA cash

Many (but not all) people who have Flexible Spending Accounts, or FSAs, are on the clock to spend the funds in them by Dec. 31. FSA money is use-it-or-lose-it, so you should definitely use it to cover qualified purchases.

In addition to standard stuff like bandages, painkillers and thermometers, eligible items also include DNA kits, massage guns, pimple patches, heating pads, ice rollers and therapy.

✅ Go to the doctor

Speaking of wellness, Sam Davis, a certified financial planner and managing member at TBH Advisors, says it’s a smart idea to check whether you’ve met your health insurance deductible.

Health plans tend to follow a calendar-year schedule, which means your deductible — the amount you have to pay out of pocket for a service before your insurance kicks in — will likely reset on Jan. 1. If you’ve passed that threshold for 2023, you may want to schedule some last-minute appointments so as to make the most of your coverage.

“Go ahead and pile in those health care needs before the end of the year,” Davis adds. “That can save you thousands.”

✅ Estimate your taxes

Tax Day may seem like a distant worry, but Steber says “you don't want to dismiss your tax return as ‘something I do in April’ — that’s the wrong attitude.” He suggests sitting down now with the past 11 months of pay stubs, plugging them into an online tax projector and running a “rudimentary calculation” on how much you might owe (or get back) when you file your 2023 income taxes.

“If you get a shocking [or] disappointing answer, you need to act accordingly,” Steber says.

Set aside money for that looming tax bill or, better yet, consult a tax professional. While you’re chatting with them, you may want to ask about whether you should try tax-loss harvesting to offset your capital gains taxes — a common move that has a Dec. 31 deadline.

✅ Update your estate plan

Nobody likes thinking about their estate plan, so Davis suggests using Dec. 31 as an “artificial deadline” to motivate you to take care of business. Review important documents like your will, trust and power of attorney, paying extra attention to any life changes that impact your beneficiaries. Better to do it now rather than have to scramble later.

“The end of the year can be an important mark where you're going, ‘I’ve been putting this off, and I’m going to have it on my calendar so that this gets done,’” Davis adds.

✅ Throw some money in savings

The yields on high-yield savings accounts and certificates of deposit have had a meteoric rise over the past year and a half as the Federal Reserve has repeatedly hiked interest rates to try to curb inflation. Though inflation is still a ways away from the Fed’s desired target of 2% over the long run, it recently cooled to 3.2%, which has experts speculating that our spate of rapid rate hikes could be over (for now).

That means savings APYs likely aren’t climbing any higher — and might even start to slightly decrease over the next year. So seize the moment. Open a high-yield savings account or CD or put a little extra cash into your existing one(s) in order to take advantage of this interest-rate environment.

We’ve got to get busy.

Want to be as prolific as Issa Rae, actress/writer/producer extraordinaire? The star just revealed the secret to her success, and it’s… a $44 candle. Rae told People she keeps Terminal B’s “Paris Roses Musk” candle in her home office. “It makes me feel like I'm working at a quaint coffee shop in Paris and has the perfect scent for productivity and creativity," she added. I’m not insecure, but it can’t hurt. 

See you next week.

P.S. Is there anything you’re trying to take care of before the end of the year? What’s your favorite holiday cocktail? Do you like radishes? Send candles to julia@money.com.

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