Your Year- End-Checklist for Financial Wellness and a prosperous 2024 | Episode 33

Welcome to the Sugar Daddy podcast. I'm Jessica and I'm Brandon and we're the Norwoods, a married millennial couple, here to help you build wealth so you can live the life you've always dreamed of. Brandon is an award-winning licensed financial planner with over 10 years of experience and millions of dollars managed for his clients all over the US. Don't worry, we leave all the intimidating finance mumbo jumbo at the door Stick with us as we demystify the realm of dollars. So it all makes sense. While giving you a glimpse into our relationship with money and each other, we are so glad you're here. Let's get started. Hey babe, what are we talking about today?

Well, today we are talking about the year-end financial checklist. 2023 is quickly coming to a close and we want to go over some of the financial things that you should be checking on field list to make sure that you complete it before the year ends.

All right, I feel like we did this last year. Is this something we're gonna be doing every year?

100%.

Okay, so an annual, year end or year in review checklist.

Yeah, because you want to. At the end of the year you want to review how the year went, but then also you want to get started so that you're preparing yourself to go into the next year with, you know, a plan in place so that you can have even better year than the year before.

Yeah, if you don't reflect, then how are you gonna make any changes to get you to your goals? Correct. All right, well, let's get into it. What is the first thing you recommend people do?

First thing is review your budget, assess how your spending was for that year, take a look at how much you saved and you know, based off of that assessment, do you maybe need to cut back on some of the spending.

Yes.

Do you need to increase your savings?

Yes.

Everything's pretty much gonna revolve around some form of a budget, even though we don't like the word budget, cash flow, conscious spending, whatever you want to call it, you got to review it.

Yeah, absolutely. I was thinking about that just for us and I'm like where did all our money go? I need to put these cards down. It's so easy when your card is saved on all these different platforms, right? It's like, oh, we need this, amazon, amazon, amazon and it just it adds up so quickly. So we need to do this as well. We need to have our money meeting, but before the end of the year, because I want to pull back. We've got some great plans and things for next year and I don't want to be looking at our vacations and those budgets and having to make concessions because we didn't plan accordingly.

Yeah, you want to. You know, go ahead and like account also for any changes in income you might have any known big expenses that you're gonna have coming up and also just talk about your financial goals to make sure that your budget isn't aligned with being able to achieve those.

Yeah, absolutely Alright, so review your budget. What's number two?

Maximize your retirement contributions, and by that I mean the amount that you can comfortably put into the accounts. So you know, to kind of refresh your memory, if for your 401k plans, 403b, stuff of that nature, your maximum contribution for this year is 22,500, and if you are 50 and older and happen to be listening to our Elder Millennial podcast, you have an additional $7,500 that you can contribute, bringing you to $30,000.

So this is for your retirement accounts.

Correct, you know your 401k plan 403b, the accounts you have normally through your employer.

Okay, what else?

Now also, with an IRA or Roth IRA, you can contribute a maximum of 6,500 and if you are once again 50 and older, you get an additional $1,000 you can contribute. So that brings you to $7,500 is the max you can contribute for 2023.

Alright, and then they have until the end of the year to put that additional money in Correct, alright. So if you are not maxing out those accounts and you have availability to do so, you've got limited time left.

Yes, as far as the 401k plans, you have a little bit longer of a time period for your IRAs, but for your 401k plans, if you are not self-employed, you know, if you have a W2 income in the year is what you have to have it done by.

Okay, anything else to add for your retirement contributions?

Yeah, I mean at this point in time, even though we're looking at maximizing the amount for the end of this year, you can also start to plan for 2024. So the contribution limits have increased a little bit. For your 401k plan, you can contribute $23,000. 50 and older you still get an additional $7,500. You can contribute on top of that. And then for your IRA, $7,000 is the max for 2024 and if you're 50 and older, once again you get an additional $1,000 on top of that that you can contribute.

Alright, what is number three?

Tax plan. Tax is our favorite word.

I know I feel like tax is a worse. I was about to say worse, or a worse word or a less liked word than budget.

Probably.

Even because, like I think you understand your budget right, it's like money in, money out, I'm spending too much, my bills are too high. Have you seen the price of berries lately? We get that taxes. We just don't understand, right. So it's like an even dirtier word because we know it's coming out of our paycheck. We see our paycheck being like strict of all the money we could have had because of all the taxes. But like, how does it actually work? We're not here to talk about that. So let's talk about the tax planning. But yeah, tax, the dirty T word.

Once again, I always, you know, say that I stay in my lane. So the best place to get the advice on your personal situation is to consult with the tax professional. Have them take a look through your financial situation you know your financial situation and let them help you make recommendations on things that maybe you can do to minimize your taxes for this year but then also maybe help you plan better, you know, going forward, to help you keep more money and give less money to Uncle Sam.

There you go. All right, what is number four?

Number four is emergency. Emergency I'm just came and speak to today Emergency fund check, proofing your emergency fund, making sure that you have the adequate amount of money in that emergency fund.

Yeah, minimum three months. I would even, especially in this economy, recession proofing yourself. I mean, if you can up it to four, five, six plus months, right, maybe even up to a year. I mean, I'm in the tech space and all you see left and right are layoffs. So you know, if you're not working for yourself, this sounds terrible, but you should always be prepared for a layoff. Right Like your job is not guaranteed. It doesn't matter how perfectly you're performing, doesn't matter what your supervisor has said in the past, like, if you do not work for yourself, you are at risk for getting laid off. It's the hard truth, so you have to be prepared.

Yeah, if you don't have anything saved up currently, shoot for three months is your first goal, and then you know next goal after that, once you have three months, six months, and then you can also tailor it depending on, as just was saying, you know what type of industry you work in, what is the probability of you possibly being laid off, but then also what is the probability if you do get laid off and being able to find employment again, and then you know having an adequate amount that you feel comfortable with.

Yeah, and not to get too off track, but your resume should be up to date. This is a great time to look back at all the projects you were involved in, the work that you've done. You know our lives are so busy that you, as part of doing your job, are just boom, boom, boom knocking it out. You need to have that documented. So get organized, have a running record of what you've been working on, what you've been contributing to, so that in the event that you do need to have an updated resume, it's ready to go and if somebody asks you for it, you can send it off right away.

And the thing also, too, about emergency fund is that, in the event that you do get laid off, if you have an adequate emergency fund, that gives you a much longer runway to find your next position that actually more allows with what you want to do, rather than just simply taking the first thing that comes your way.

Yeah, you don't want to be desperate in those situations because it's not usually going to land you in the best possible place for you. Yeah, all right. What's next after emergency fund?

After emergency fund is reviewing your investments. This is going to be taking a look at your investment portfolio and you're going to be assessing. You know how is your performance? And this is going to be a performance based upon you know how aggressive or how conserved if you are in your account. So how you actually measure that is going to be a little bit different from individual to individual, based upon you know the construction of your portfolio. You know, are you diversified in the account? Does it align with your risk tolerance? Does it align with your financial goals? So, in all honesty, for some people this might be a little bit hard to assess properly If you don't have the knowledge and are taking the time to learn the knowledge. Do you understand how to assess your portfolio? So this might be also one of those things where it's good to you know maybe do a little bit of more research on your own before you do it or reach out to a finance professional to help you out with that.

Do you know a financial professional that could help you out with that?

I know one Maybe perhaps.

And just a shameless plug here, because this is what Brandon does for a living. He has added a bunch of different a la carte services to what he can do for you. So if full financial planning is not in your budget, it's still intimidating. You don't feel like you're quite there. There are other things that Brandon can help you with for a shorter time period, a smaller amount of money. So definitely, you know. Click on the link in the show notes, go to his website. Look at all of the different things that you can work with Brandon on to improve your you know, your financial health. If you will Also, I am going to circle back to your emergency fund. It should be in a high yield savings account. We didn't say that, I know this is like all you hear is talk about. It doesn't make sense for your money to not be in a high yield savings account. Our savings account, if we don't add anything else to it, is going to make $1,800 this year. Just by sitting there. You are missing out, literally losing money by not having your emergency fund in a high yield savings account. Alright, my rant is over Anything else. On reviewing your investments, babe.

No.

Okay, next, health insurance and benefits. Talk to us about that.

Well, first you want to review your health insurance plan. You know the current plan that you had. Was it adequate? Did it cover all your needs? Are there possibly any improvements that you need to make in the plan of your choice, or have you had any changes to your life, whether that's health-wise or adding additional members to your family, that calls for you to make a change in the health plan that you actually choose.

And obviously that should technically be done during open enrollment. If you do have any major life events, like if you're adding a child, you can then change your benefits for those situations if you're getting married, getting a divorce etc. But technically those are things you should be doing during open enrollment.

Correct and also, too, this is also a time period for you. If you have a flexible spending account or a dependent care account, then you want to make sure that you use all that money before the year end, Because with a flexible spending account it does not roll over. You have to use all the money that you contributed in that given year or else you lose it. It is not like a health savings account where the money does roll over. So, flexible savings account, you need to use all that money.

And in a previous episode over a year ago at this point which is kind of crazy to say I made the correlation of FSA fast. F is fast, you have to use it fast. Aka, in that year HSA H is for hold, you can hold on to it because it rolls over we actually realized that we had a little over $2,000 on our FSA card that we had not touched all year. Just a total oversight, because life happens and we're so busy.

And we all make mistakes sometimes.

And we all make mistakes. There's no shame. This is a safe space, don't forget that. And it was great because we didn't really have anything that we needed to use that money for. But I have been wanting to do some GI kind of gut health, food sensitivity type testing, and it's expensive, and so we went ahead and got we. I went ahead and got that done, got some really good information. If you have any gluten free food favorites, send those my way, because I officially have a gluten allergy. So, yeah, definitely use that money. You've only got a couple of weeks left, so spend it. You can use it on sunscreen, sunglasses, prescription glasses, feminine care, heating pads. I mean you can stock up on your kids allergy medicine for the next year if you, if you wanted to like. Just don't lose that money. Yeah, normally contact lens solution so many things.

If you have any questions about what you can spend it on, normally you can go to wherever your FSA is held your health insurance plan. They wouldn't be able to provide you with a list of all the different things that you can actually qualify.

Yeah, the list is very expansive, I mean.

I was.

I was surprised. Even there was like a red light face mask and heating pads and all sorts of things that I was like, oh, that qualifies. So got myself like four new pairs of glasses. Use that money, don't. Don't lose that money, all right what's number seven Debt management.

What you're going to want to do is evaluate all the outstanding debts you have, whether that's credit card debt, student loan, debt, car loan, whatever it may be. You want to evaluate what those debts are. You want to go, you know, want to evaluate what the interest rate is on them, the balance on them and also the terms of, you know, flexibility in regards to repayment, if need be, more specifically, the student loan, which is a little bit more difficult because they're still trying to figure everything out with that. But the idea is that you want to have a plan in place on how to repay those debts. Now there's various ways, whether, that's you know, you want to focus on the one with the highest balance first, or focus on the one with the lowest lowest balance first, or focus on the one with the highest interest rate first. I have a preference for myself, but, in all honesty, either way is fine. It's a matter of what works for you and what you're going to stick with and what's going to help you accomplish the goal of getting the debt paid off.

And we would consider anything high interest, anything over 7%, which I know is actually mortgages. At this point. We know most of us are not going to be paying off our mortgages. But you know, if you're looking at your credit cards store cards, maybe your car loan, maybe that could be refinanced. But if you're paying 24.99% on a credit card, I mean you're spending a lot of extra money every time you don't pay that bill off in full. So you know, that's where in the snowball method could potentially be useful and again, that's something that Brandon is more than happy to help you with.

And also you can listen to you know previous episodes where we specifically focus on debt management and it talks about the different strategies that you can utilize to pay off your debt in a more efficient manner.

Yeah, absolutely All right. What's number eight?

Here's one that people often overlook Update beneficiaries in your legal documents. So, a lot of accounts that you have, you know your 401k plan checking accounts you can name a beneficiary on the account. So, one, you want to make sure that you at least have a beneficiary named and two, make sure just the correct beneficiary. Let's say, where I'm 40, she's 38. We have friends who are divorced, married again, you know, divorced again. So you want to make sure that you don't have an ex-wife as a beneficiary if that's not what you want.

Yeah, that listen. We're not going to get into the details, but it can get real messy and once that beneficiary is named and not updated, your financial planner can't fix that, the bank can't fix that. Like, if you die and that beneficiary is not the person you wanted it to be, guess what? They're getting your coins and you might be leaving your new spouse with nothing. Get that paperwork done.

Yeah, and let me tell you, I have experienced this where I didn't put the policy in place, so it was not on me to make sure the beneficiary was correct. I was more or less delivering the death benefit because the person had passed and the person previously put the policy was no longer at the firm, but they had their ex-wife when they really should have been their current wife, and their current wife calls in and you have to tell them. I can't give you any information because you are not the beneficiary.

And that was not a small policy. If I remember, it was like a multimillion dollar situation. Could you imagine your current spouse not getting your death benefit and your ex-spouse getting it, because you didn't take 10 minutes to update your beneficiary? Just do better, yeah.

And this is also the time to also like. One of the biggest things that people overlook is having a will. They're simply having a will. Also, you know, if you have kids, especially, you should have a will.

Yes, and we are doing an episode strictly on wills in early 2024. So definitely stay tuned on all of the details and the reasons why and you know, I think there's so much misconception around well, I don't have a house and I don't need a will, and it's. There's so much more to it than that. So stay tuned. That episode is coming. It's going to be really informative. All right, update your beneficiaries and legal documents. That was number eight. What is number nine?

Evaluate your subscriptions and memberships. You know we have a thousand different. You know different streaming services you can have a subscription to. You can have a subscription to a thousand different. You know Spotify, apple Music, all those. Evaluate all your subscriptions and eliminate the ones you're not using. Very simple.

Yeah, you could easily save $100 a month by canceling subscriptions. And even if that is like a gym membership that you're not using. Like, be honest with yourself and cancel what you're not using. Do you need Spotify and Apple Music and iTunes and and and? Where can you just get all of your music from one platform? Let's be serious.

And even like if you were to cancel your subscriptions and say you have $100. For some people $100 might not seem like a lot, but $100, you know, putting it towards maybe debt pay down, or putting it towards your emergency fund or towards investments. I'll take an extra $100.

Yeah, $100 a month is $1200 a year, and that will grow in an investment account, so it makes a difference. Alright, number 10 is what?

Review your credit report.

This one is so important I'm also going to plug if you have not yet locked your credit bureaus, you should do that. It is a simple and quick and easy way to make sure that people are not opening an account in your name. Just recently had a friend who realized that an account, a credit card, was opened in their name and that could have totally been prevented. Also, make sure that on all of your credit cards, all of your bank accounts, you have your notification set for specific spending. If you don't normally spend $500 on your debit card, for example, have a notification that if somebody swipes your card or purchases something for over $500, that you get an alert. So there are mechanisms in place. Again, take a couple of minutes before the end of the year, get those notifications set up and review your credit report. They are free. You can get at least one a year. I think you can still get two a year for free, and that is what's going to show you what accounts are open, what the balances are, and hopefully you don't find anything. That's a surprise, but it's better to know than to not know.

Yeah, so you want to check and make sure that there aren't any errors or discrepancies, and if you do find those, then you want to go in and dispute them.

Exactly, Alright. What is number 11?

Alright. So if you are a person who contributes to charities, then you want to go ahead and get your charitable giving done. This is going to be like you know making any type of donations that you want for tax benefits and making sure that you have the proper paperwork to reflect that so that when you file your taxes, you can go ahead and get that deduction. Perfect.

What is number 12?

Insurance review. This is another one I think is often overlooked, and this is looking through all the different types of insurances that you have, whether that's home, auto, life insurance, disability insurance and really making sure that the policies, adequately, are sufficient enough for your current needs.

Yeah, like, didn't you recently have a client or come across somebody that had an old life insurance policy and has since added like one or two kids? Yes, yeah.

It's often most people, like you know they might get things done, which is great. I'm glad that you took action and got something done, but most of the stuff within your finances you have to continually update as your situation changes. One of the biggest ones that she said that I often do overlooked is life insurance and also disability insurance. A lot of those are reflected upon, like you know, your current status. You know where you're at currently in life. So as you get a family, as you start to make more income, if you buy a house, you need to make changes to these policies, often increasing them.

Yeah, absolutely. And then make sure the correct beneficiaries are on those policies. It all ties back together. But it's also good to also understand your policies.

A lot of people don't understand them and also, I think, a lot of financial professionals don't take the time to thoroughly explain them to them. So one of my all-car services that I do provide is an insurance review. I also, with all my clients I reach out, making sure that we do an annual insurance review to make sure that if they've had any changes, then we can go ahead and make those necessary changes. You know, if they've had those changes in life, we can reflect those in their policies.

All right insurance review was number 12. What is number 13?

This is evaluate your career goals. One of the biggest things within financial planning is maximizing your income. So I don't think a lot of people they get so busy with just actually, you know, doing their jobs that they don't take a step back and think of where they want their trajectory to go as far as their career goes.

Right. Also a good time to again look at how you can bring in additional income outside of your current job. Is it a side hustle? Is there something that you could be charging friends and family for that you typically do for free? I know we've gotten messages on Instagram, on social media, saying hey, I used to do this for free and I just charged $75 and I'm now putting that money towards, you know, my son's 529 plan, etc. Etc. So every little bit helps, it all adds up. We've had some car trouble with Brandon's car recently. I took on, like a little side hustle, helping my vet design there downstairs. It was not something that I had done before or charged for and that is going to help now contribute to the new catalytic converter that we need. So you know, anything that you can do where you're giving your time, your service, your expertise, make sure that you are being compensated for that. It's a missed opportunity if you don't, because that person would likely pay somebody else for it anyway. So don't count yourself short and charge for your time, your energy.

Also, too, this is like a time for if you know you're working for somebody else, then have these conversations with your bosses as far as like where you, you know, want your career to go. What do you need to do to get to that next step? Because you want to have a clear plan in place because, let's be honest, no one has ever achieved a significant amount of success without actually planning it out beforehand.

Yeah, you should be doing, bare minimum, quarterly career type conversations with your manager or supervisor and if you're not currently doing that, you should be asking for them. That is bare minimum having a conversation four times a year with your boss to say, hey, here's what I'm looking at, you know where do you see gaps? What can I improve upon? Are you satisfied with my you know with my efforts and the work that I'm doing and make changes as needed so that you can qualify for those raises, for the bonuses, for the stocks, etc. And if you don't ask and you don't get that feedback, how are you going to improve?

And one more thing to start to surround yourself with people where you guys have these conversations as friends. We have conversations about our careers with our friends where we're like, hey, like you know, this is what I want to do, and you know it might sound crazy to you, but then, like, their great friends are like no, you could totally do this. So, like, create that group of people where you guys all hype each other up to be the best versions of yourself.

Absolutely yeah. You need your hype people. You need people that are going to challenge you, give you a new point of view and perspective. If you don't have those people in your network now, start looking for them, because that is invaluable. All right, so that was evaluate your career goals. We have two more. What is next? Number 14.

Financial education.

Yay, you're listening to this podcast. You're doing really well already.

Yeah, the idea is that you want to start dedicating some time to increasing your financial literacy, your knowledge of finances. It might not be the most interesting thing to you, but let's be honest, like if you listen to this podcast, hopefully you have some form of interest in it, but then you also realize how important it is. And if you're able to increase your knowledge base and then apply the knowledge that you've learned, then that's going to help you live the life that you ultimately want to have.

And hopefully we do a good job of not making it super boring. We also, you know, we listen to finance podcasts and read finance books and obviously we find that very interesting. But there are now books out there and hopefully we will write one one day putting that into the universe. But there are books now that take that boring, stale heaviness of finance talk out of it, and so you know, if you need help finding those resources, we are happy to point you in that direction because we want you to learn and grow alongside us so that we can all end up in Bora Bora together.

Yeah, the thing is too. When it comes to, you know, the financial education aspect, take the bite sizes that you know are suitable to you. Like you don't have to have to sit down and do two hours straight, you can listen to his podcast out there. That will give you a 10 minutes in offices of different articles, and it gives you great information in a short period of time. So Work at the pace that works best for you.

Absolutely All right, close us out, babe. What is number 15?

Set financial goals for next year, even though we're talking about the year in checklist. Part of the year in checklist is having that conversation with yourself, your spouse and figuring out how you want to move forward in 2024. You know, have the talk about what your goals are out loud. I've always said it before a lot of people don't talk about their goals out loud and I think something changes in you when you actually speak them out loud, and especially to somebody else.

Yeah, share them with your partner, with a friend, If you feel like you're gonna need some accountability. You know, ask somebody for help, Ask somebody to be your accountability partner, the same way you would if you need to or want to work out at five o'clock in the morning. Right, it makes it easier and it holds you accountable, no pun intended.

Yeah, you also wanna reflect on this past year as far as, like, the goals that you had set maybe for yourself, for 2023, did you achieve them? If not, you know what were the reasons that maybe you didn't achieve them, so that you can make changes going to 2024, so that you can achieve all the goals that you wanna achieve?

Absolutely All right. Let's recap these for you and if you have any questions, obviously reach out All of our information. Time to schedule with Brandon those links are in the show notes. This is a safe space. Brandon is a great guide. One of the things that I love about how he works with his clients is that he doesn't just tell you what to do. It's a collaborative process. He wants you to learn. So every time you meet with Brandon, you will walk away learning something new, which I think is really powerful and a differentiator between how other people operate who are just like, hey, put this in account in place or open this or do this, and you walk away and you don't know why. So if you need help but also want to learn, brandon is your guy. He offers 30-minute free consults. You can see if there's a vibe, if you guys think that you'd work well together. Obviously, this is a personal relationship, so it does have to feel like the right fit. But check them out, schedule some time and let's recap this. So your end of year financial checklist Number one is review your budget. Number two maximize your retirement contributions. Number three tax planning. Consult a tax professional to review your potential tax deductions or credits. Number four have your emergency fund in place. So do an emergency fund check. Make sure that that is fully funded. Number five is to review your investments. Number six look at your health insurance and your benefits. Number seven is debt management. Reduce that bad debt. Number eight update beneficiaries and any of your legal documents. This is super important. Don't put that off. Number nine evaluate your subscriptions and memberships. Cancel anything that you no longer need or use. Number 10, review your credit report. You can get this on an annual basis and then also lock your credit bureau so that you are not victim to fraud and some scam or opening up accounts in your name. Number 11, assess your charitable giving so you can consider making donations for tax benefits and because you're a good human, of course. Number 12, do an insurance review. Make sure that all of your policies life insurance, home, disability, auto that you have the coverage that you need. Number 13, evaluate your career goals. Make sure that you're having those conversations with your manager and your boss. Number 14, educate yourself financially. Continue to listen to this podcast. Read books. Reach out to us for recommendations. There's really some great new books out there to help you learn about all of the intimidating finance topics. And then number 15,. Last but not least, that was weird. Set financial goals for the next year. Evaluate what you did well this year, what you would like to do better next year. How much money would you like to save? How much debt do you wanna reduce? Write it all down, tell it to somebody. Have an accountability partner so that in 2024, when you do this year in review, you can be really proud of yourself. What else, babe?

That's it. That's all I have and those are in no particular order, but I would definitely recommend that you know, you run through the list and make sure you have these done, you know, part into year.

Absolutely happy holidays, y'all. Don't forget Benjamin Franklin said an investment in knowledge pays the best interest. You just got paid until next time. Thanks for listening to today's episode. We are so glad to have you as part of our Sugar Daddy community. If you learned something today, please remember to subscribe, rate, review and share this episode with your friends, family and extended network. Don't forget to connect with us on social media. At the Sugar Daddy podcast. You can also email us your questions you want us to answer for our past the Sugar Segments at theSugarDaddyPodcast at gmailcom, or leave us a voicemail through our Instagram.

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