Planning
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Your 2020 End-of-Year Personal Finance Checklist


2020 is drawing to a close, and many of us are thinking ahead to 2021. The end of the year is a great time to check in on your finances and set yourself up for success in the new year. To help get you started, we’ve put together a checklist of important financial tasks you should consider before the clock strikes midnight on New Year’s Eve. 

The basics

Review your spending and set up automated savings: Automate your savings to your Investment Account so you don’t have to think about it. You can use our free service Autopilot to automate smart transfers so you always have the right amount of cash on hand.

Pay down your credit card debt: Credit cards currently charge an average of 16% on your outstanding balances, so paying off your debt would be like getting a risk-free 16% return. 

Top off your emergency fund: Setting up a good emergency fund can give you peace of mind. Find out how to build the emergency fund that’s right for you.

Pay down your student debt: You should consider paying down or refinancing your student debt if it charges an interest rate of 6% or more.

Your job

Contribute to your 401(k) account: Contribute as much to your 401(k) account as your employer is willing to match.

Roll over your old 401(k): If you recently changed jobs or are thinking about changing jobs, you should consider the possible benefits of rolling over your 401(k) into an IRA.

Spend down your FSA: If you have an FSA, you may want to spend the bulk of it on qualifying expenses in case you aren’t able to carry it over to next year.

Don’t exercise your stock options if you can wait: Waiting until the new year means you’ll defer the tax you owe from exercising your options until the 2021 tax year.

Your family

Review your insurance policies: Now is a good time to consider whether any major life events might change your insurance needs. You can also sit down with your parents or other relatives to review their coverage.

Consider a 529 college savings plan account for your kids: When it comes to planning for your child’s college education costs, few things have the potential to prove as financially rewarding as enrolling early in a 529 and growing your savings tax-free.

Superfund your 529 college savings plan: Superfunding a 529 offers significant benefits both in terms of objective savings results, as well as from a behavioral finance perspective.

Your taxes

Harvest your losses to lower your tax bill: Tax-loss harvesting is a strategy that allows you to reduce your tax bill while you maintain the risk and return characteristics of your investment portfolio. If you use Wealthfront’s Tax-Loss Harvesting service, you’re likely to receive tax savings that more than cover your annual advisory fee (as more than 96% of our taxable Investment Account clients have, according to our research). 

Give a tax-deductible charitable contribution: Now is a good time to donate to a cause you believe in and simultaneously benefit from it on your 2020 taxes. This year, because of the CARES Act, you can deduct $300 of charitable contributions from your taxes even if you don’t itemize.

Claim your residential solar energy property credit: The credit for solar electric property and solar water heating property is available for property placed in service through December 31, 2021, based on an applicable percentage here.

Our thanks

As 2020 comes to an end, we want to sincerely thank all of our clients who trust us every day with their hard-earned money. We are proud to offer you high-interest checking and personalized, automated investment portfolios,  and we’re not stopping there. We envision a future where we’ll be able to optimize all of your money across spending, savings, and investments, and we call this vision Self-Driving Money™. With Self-Driving Money™, once you’ve direct deposited your paycheck and paid your bills with your Cash Account, you’ll be able to have our software route the remaining money to the most appropriate accounts for your lifestyle and goals. We’re building a financial system that favors people, not institutions, and we can’t wait to show you what’s next. We promise to continue to deliver value to you in 2021 and beyond. In the meantime, happy holidays!

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Disclosure

We’ve partnered with Green Dot Bank, Member FDIC, to bring you checking features.

Checking features for the Cash Account are subject to identity verification by Green Dot Bank. Green Dot Bank operates under the following registered trade names: GoBank, Green Dot Bank and Bonneville Bank. All of these registered trade names are used by, and refer to, a single FDIC-insured bank, Green Dot Bank. Deposits under any of these trade names are deposits with Green Dot Bank and are aggregated for deposit insurance coverage. Wealthfront products and services are not provided by Green Dot Bank. Green Dot is a registered trademark of Green Dot Corporation. ©2020 Green Dot Corporation. All rights reserved. 

Cash Account is offered by Wealthfront Brokerage LLC (“Wealthfront Brokerage”), a member of FINRA/SIPC. Neither Wealthfront Brokerage nor any of its affiliates are a bank, and Cash Account is not a checking or savings account. We convey funds to partner banks who accept and maintain deposits, provide the interest rate, and provide FDIC insurance. Investment management and advisory services are provided by Wealthfront Advisers LLC (“Wealthfront Advisers”), an SEC registered investment adviser, and financial planning tools are provided by Wealthfront Software LLC (“Wealthfront”).

The 529 Plan is administered by the Board of Trustees of the College Savings Plans of Nevada, chaired by the Nevada State Treasurer. Ascensus Broker Dealer Services, Inc. serves as the Program Manager. Wealthfrontfront Advisers LLC, an SEC-registered investment adviser, serves as the investment adviser to the Plan. Wealthfront Brokerage LLC, a member of FINRA/SIPC, serves as the distributor and the underwriter of the Plan.

The information contained in this communication is provided for general informational purposes only, and should not be construed as investment or tax advice. Nothing in this communication should be construed as a solicitation or offer, or recommendation, to buy or sell any security. Any links provided to other server sites are offered as a matter of convenience and are not intended to imply that Wealthfront Advisers or its affiliates endorses, sponsors, promotes and/or is affiliated with the owners of or participants in those sites, or endorses any information contained on those sites, unless expressly stated otherwise.

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About the author(s)

The Wealthfront Team believes everyone deserves access to sophisticated financial advice. View all posts by The Wealthfront Team

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checklist, end of year, year-end