6 items for your end-of-year financial checklist

The end of 2023 is quickly approaching. You may be focused on travel plans, gift shopping, and family gatherings, but there’s one more thing to keep in mind: your money. Be sure to check off these 6 items on your financial to-do list before the end of the year. 

Max out retirement accounts 

Whether you are an employed physician or you own your own practice, there’s a good chance you have access to a work retirement account. If you work for a for-profit organization, it’s a 401k. If you work for a nonprofit, it’s a 403b. If you work in the military, it’s the TSP. (And, if you own your own business, you can open a solo 401k.)

Aside from providing a source of income in retirement, these accounts have other perks that may be useful to you now. The biggest one is that they are tax-efficient. High-earning physicians can put $22,500 tax-free into the account as an employee (in 2023), and even more into the account if they are an employer. 

This additional money can add up to tens of thousands of extra dollars per year, come retirement. 

Look at your benefits package

The end of the year is usually time for open enrollment at many jobs. This is when you re-enroll in your current health insurance plan, select other benefits at your job, or switch to a new health insurance plan altogether. 

Some people with chronic health conditions may want to select a comprehensive health plan that reduces their copays and out-of-pocket costs. Other people who don’t have many medical issues may want to enroll in a high-deductible health plan with a lower monthly premium and the option to invest money in a health savings account (HSA). 

Parents of children may want to consider contributing money to a dependent-care flexible spending account (dependent FSA) to get some tax benefits from the money they spend on childcare or daycare fees. 

Some jobs may provide free life insurance and long-term disability insurance to employees. Other jobs may give you the option to enroll in things like short-term disability insurance (which is what many women use to supplement their income during maternity leave). Take a look at your options and determine which health insurance plan and benefits may be best for you. 

Complete your backdoor Roth IRA

As physicians, many of us make too much money to directly contribute to investment accounts like a Roth IRA. As a result, we need to invest money in the account in a different way: through the backdoor. 

A backdoor Roth IRA is the process of putting money in a traditional IRA first, then moving it to a Roth IRA, and investing money through the account. 

Given all these perks, investing money through the backdoor Roth IRA is highly encouraged. Although you technically have until the tax-filing deadline in April 2024 to complete this process, doing it at the end of the year drastically simplifies your tax forms and any paperwork you have to submit to the IRS. 

Change any tax withholdings, if needed 

Many physicians have multiple streams of income—whether that’s from working extra shifts at their current job, working locums for a different company, or making money from side gigs outside of medicine. 

This means you will have to “repay” the government when you file your taxes in April. For many people that includes federal income taxes, self-employment taxes, and state taxes. If you aren’t someone who sends in estimated quarterly taxes to account for extra income, be sure to have additional money withheld from your paycheck to decrease the chances of a large tax bill in April. 

Set your budget boundaries  

It’s the holiday season—the time of the year you buy gifts for your loved ones and plan trips to see family. 

If you don’t set parameters in place you may find yourself spending more than you imagined and racking up credit card debt as a result. Try to avoid this. Set boundaries in your budget and stick to them. Determine the total amount you have to spend, and then see how much you can reasonably afford to pay for certain things, such as travel and gifts. Let your family know that you have made a promise to yourself not to get into debt during the holiday season, and find other ways to contribute and show love to the people around you.  

Complete your charitable giving 

As you close out 2024, you may be inundated with requests to donate to charity. Whether you decide to give 10% of your earnings to your local church, donate a large sum to a nonprofit you care about, or “round up” your grocery bill toward a good cause at the grocery store, now is the time to think more carefully about these donations.

Think about what you can reasonably afford to give away, and consider making those donations before the end of the year.