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5 Money Moves to Make Before the End of the Year

By: David Bach  |  Last Updated: January 13, 2023
Financial Expert & 10x New York Times Bestseller

You don’t have to wait until January 1 to start chipping away at next year’s goals. In fact, if you want to set yourself up for success in 2023, I recommend preparing NOW. The way you end your year has a huge impact on how you start the next year, so let’s lean into the rest of 2022 and finish strong.  

Below, I’ve highlighted five smart money moves to make before the end of 2022. This is far from a comprehensive list, but will help you finish 2022 on a high note and set you up for financial success in 2023.

1. Understand your cash flow

How much money did you make in 2022? How much of that did you spend? What were your biggest expenses the past year? What has changed since Covid-19?  Have your expenses or income changed? Chances are, they have. 

To make good money decisions, you need to know how much is coming in, how much is going out and what’s leftover. At the end of the day, if you want to build wealth, what matters more than what you make is how much you keep of what you make.

Go through your credit card statements from the last few months to get an idea of where your hard-earned dollars are going. Are you saving enough? Is there anywhere you can cut back in order to free up extra cash? 

It’s especially important to understand your cash flow heading into the holidays, which can oftentimes wind up being more expensive than we plan for. Get a clear idea of how much money you can realistically spend this holiday season (while still meeting your savings goals) and stick to that number!

To stay on track, record your expenses. Online services like Personal Capital and Mint make the process easy — you connect your accounts and the app will provide you with reports on your spending (plus other things, like your assets, liabilities and net worth). 

If you focus on reining in your spending these last two months of the year, you’ll establish smart habits heading into 2023 and will be ready to save more of your income than you ever have.

2. Beef up your emergency fund

Having a cash reserve to fall back on is more important than ever. If you haven’t already built an emergency fund, or if you’re among the 14% of U.S. adults forced to empty their emergency savings during the Covid-19 pandemic, start saving now.

I always recommend having a cash cushion of at least three months’ worth of expenses. Though, with all the economic uncertainty these days, I’d aim to have six months’ worth. Ultimately, how much you should save depends on what you feel you need to sleep well at night. 

Figure out how much money you’d have to save every day or every week in order to have a fully stocked emergency fund by the end of the year. If that’s unrealistic, at least start the process of saving and make it a 2023 goal to set aside at least three months’ worth of expenses.

For more resources, follow my four steps to building an emergency fund and read up on the best places to stash your rainy day fund right now.

3. Rebalance your portfolio

It’s good practice to revisit your investment portfolio once a year, especially during years as turbulent as this one. Look at where your money is invested. Does it align with your risk tolerance? Is your portfolio too conservative? Too risky?

This is something I personally did this year. The stock market crash in March was a bit of a wake up call for me, in that I realized I wasn’t as conservative and diversified as I thought I was. Even though my accounts have since recovered, I didn’t expect them to plummet as much as they did and I never want to see my net worth drop that much again, so I rebalanced my portfolio to make it more conservative once the market had recovered..   As write this, the market is back to an all time high.  If you haven’t rebalanced your portfolio this year, now could be an ideal time!

Read my guide on how to invest your money at every age. It explains what percentage of your portfolio should be allocated to different asset classes, including cash, bonds and growth investments. You can also use this formula to figure out how much you should invest in stocks and bonds depending on how old you are.

If you haven’t started investing, now is the time to open an investment account and put your money to work! The longer you wait, the more you’re missing out on the miracle of compound interest, which is what causes your money to grow over time.

The simplest way to put your money to work is to use a retirement plan, like a 401(k) or IRA (individual retirement account). There are also micro-investing apps like Acorns and Stash, and robo-advisors like Betterment or Wealthfront, that make investing incredibly simple. You don’t need a lot of money or time to get started if you use one of these platforms.

4. Shop for better insurance

It’s smart to shop around for cheaper insurance every year. Not only could it potentially save you a lot of money, but it’s good practice to review your policy, understand exactly what you’re paying for and make sure you’re adequately covered in case of an emergency. 

Start by calling your insurer and asking for a lower price — and don’t be afraid to mention you’re considering switching to a competitor. Next, you can shop around with other companies and see if you can land an even better deal.

To help you get started, I compiled my top recommendations for:

5. Set specific money goals for 2023

If you want to have a strong 2023, you have to intentionally plan, create and design it — and that starts with setting specific goals. 

Think about what you want to accomplish financially next year. Do you want to up your savings rate? Do you want to invest in real estate? Do you want to pay off any lingering debt? The more specific you can be, the better. If you want to up your savings, what percentage of your income do you want to set aside? If you want to invest in a home, how big of a down payment do you need? If your goal is to pay down debt, when exactly do you want to be debt-free?

Write down your goals. It’ll be more powerful than just thinking about them. Then, tape your list to your bathroom mirror or refrigerator — somewhere you’ll see them constantly. And don’t wait until the new year to start chipping away at them. Start today. Live rich now!

Read next: Ask Yourself This One Question To Change Your Life in 2022