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We are officially at the end of 2022. How are your finances?
The end of the year is a great time to look at your overall financial picture. Doing so can help you identify where you might have room for improvement, such as cutting extra costs or adding a little more to your savings.
While analyzing your finances can be a long and difficult task for many, it doesn’t have to be. We’ve compiled just three financial things to do for the end of the year to set you up for success in 2023.
3 Financial Things For The End Of The Year
1. Review your credit cards
Credit cards are a widely used part of the American financial system – reaching $930 billion in total credit balances in the third quarter of 2022, according to the Federal Reserve Bank of New york. Those balances are reaching the levels of disease, signs of the country returning to the original level of spending.
As credit card debt increases, so does the interest rate–which means carrying a credit card balance is becoming more expensive. Now is the time to rethink your credit card plan.
Check your interest rate. See what the interest rate on your current card is to give you a better idea of which one is more expensive to use, if you don’t pay it off in full. each month.
In some cases, customers with good credit and a solid credit history can call their lenders and ask for a lower interest rate.
Use balance sharing offers. If you see a card’s interest rate drop—and you’re carrying a high balance on the card—consider taking advantage of a balance sharing offer. Customers with strong credit scores usually qualify for shared balance cards with an introductory 0% interest rate for a specific period, which can help you to save hundreds of dollars in interest while paying the balance down.
Keep in mind that balance transfer cards come with risks. If you don’t pay off the balance in full before the APR promotional period ends, you’ll pay interest on the remaining balance. You may also be tempted to keep spending on the card you put your balance on—and that could dig deeper into your debt hole. Many will also charge a bill as well as a number to ensure that your savings will earn more interest than any fees you pay.
Put away cards you don’t use. If you have a handful of credit cards you rarely use, you can save hundreds of dollars each year in annual fees. Some premium cards charge as much as $695 per year.
The end of the year is a great time to reassess which credit cards you want to keep in your wallet—and which cards should be ditched. . Review each card’s rewards points to see if it’s worth paying the annual fee. For example, if you’re not an avid traveler, having a travel rewards credit card that gives you access to airport lounges and free checked bags isn’t worth the cost. the annual fee for that card.
Remember that canceling a credit card can have a negative impact on your credit score. If you’re considering applying for a new line of credit in the near future, such as a mortgage or car loan, you may want to hold off on closing the account. after you get the new loan.
2. Dig deeper into your Budget
Even if you don’t have a formal monthly budget, you should take a close look at your finances to see where there is room for improvement. That could include cutting back on spending to create more revenue next year.
Reduce your monthly premiums. If you haven’t combed through your bank and credit card statements with a fine-toothed comb recently—or ever—you probably don’t know how much you’re paying monthly. payment you rarely use.
“Like trimming your trees, trimming your expenses should be an annual practice, with the goal of providing good health and well-being,” said Craig. Kirkland, director of retail banking for Nevada State Bank.
If you have a subscription that you can’t live without, Kirkland says it’s worth calling the business and negotiating a lower rate or getting more services for your current payment. This trick can be used on many services, including gyms, car insurance, home improvement companies and more, according to Kirkland.
“Like trimming your trees, trimming your expenses should be an annual practice, with the goal of providing good health and well-being,” he said. of Kirkland.
Check your emergency fund. The old advice says that consumers should aim to have six months worth of money set aside for a financial emergency. For Americans living paycheck to paycheck, it’s not available.
If you are overwhelmed by the idea of saving a large amount of money, or your financial situation just makes it impossible, start small. Households with only $250 to $750 in cash savings are less likely to experience financial hardship, such as evictions or foreclosures, than those with less than $250 in savings, according to and research by the Urban Institute.
If you’re not saving for emergencies, focus on developing a saving habit by making it part of the budget, no matter how small. You can also make the process easier by setting up automatic transfers to your bank account each day.
3. Review Your Investments
This year was the worst year for the S&P 500 in more than a decade. While investors should stay on track with their long-term investments for retirement, there are a few other ways they can check in with their portfolios before the end of the year.
Check your retirement contribution limits. For 2022, the 401(k) individual contribution limit is $20,500 (or $27,000 if you’re age 50 or older). If you haven’t met this limit, you may want to consider making an additional contribution before the end of the year. In 2023, the limit increases to $22,500 for individuals ($30,000 for those age 50 or older).
Consider other investments. If you’re looking for broad diversification, other investments can be a viable option. These investments, including natural resources and real estate, can resist damage due to inflation or currency declines more than just dividends.
Review where you stand on crypto. It’s been a bad year for cryptocurrency. Crypto exchange FTX’s fall from grace continues to roil the industry, with exchange operator BlockFi now filing for Chapter 11 bankruptcy. Take some time at the end of this year to think about where you stand in investing in mutual funds, and whether or not you’re doing well. also through all the obstacles that come.