Sharon Epperson -
CNBC
The end of the year is an important time to make financial decisions that can impact the coming year, and years to come.
From your job to your savings and investments to spending and giving, here are five things you should consider taking by December 31 that can help you set yourself up for financial success in 2023:
1. Make sure you haven't paid too little tax on your 2022 income
You don't want to end up paying interest and penalties or a big tax bill next year because you didn't deduct enough tax from your paycheck this year.
Even if you've recently been laid off, it's important to double check so you don't get an unexpected tax scare.
And, if you're retired, make sure you've paid the proper tax on your retirement withdrawals.
The Internal Revenue Service (IRS) indicates that one way to see if you are on track to pay the correct amount of income tax is to pay the same amount as you did in 2021 or, for older taxpayers income, maybe a little more.
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Keep in mind that even if you received a tax refund last year, with no stimulus payment for 2022 and a less generous deduction for charitable contributions, you may receive a smaller refund in 2023.
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You can also do a “payroll check” by accessing the tax withholding calculator on the IRS website to check the amount of tax withheld from your pay.
You may have time to modify withholding for the last pay period of the year by filing a new W-4 form with your employer.
If it's too late to arrange withholding that way or you're self-employed, you can send an estimated tax payment directly to the IRS.
The due date for fourth quarter payments is Tuesday, January 17, 2023.
2. Increase your 401(k) contributions
The 401(k) retirement savings plan is one of the most requested benefits in the workplace.
You can contribute up to $20,500 to a 401(k) plan in 2022, or up to $27,000 if you're age 50 or older.
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If you can't afford to contribute the maximum amount to your 401(k) plan, many financial advisers recommend contributing at least enough money to get your company's matching contribution, if it offers it.
That is free money.
A person makes a payment with a credit card.d3sign / Getty Images
Increasing contributions to a traditional 401(k) plan can lower your adjusted gross income and increase your retirement savings.
But with only one pay period left in 2022, you need to make contribution changes right away.
3. Increase your savings for emergencies
Having easy access to cash to cover unexpected expenses is also essential.
However, a new Betterment at Work survey reveals that just 59% of employees currently have an emergency fund, down 7% from last year, leaving 41% without any kind of safety net.
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With recent layoffs and concerns about an impending recession, getting a temporary job can be a big help.
A part-time job in retail or a restaurant, or doing some Christmas decorating for a fee, can help you get more money to save.
The Federal Reserve's (Fed) interest rate hikes this year have translated into higher rates on many online-only savings accounts.
Some of these accounts are paying up to 3.5% interest with no minimum balance, according to Bankrate.com.
4. Plan your expenses before you buy
If you can't afford to save more right now, make sure you don't overspend.
Estimate how you plan to pay for a Christmas purchase before you buy it.
Using cash instead of credit can help you stick to your budget and stay out of debt.
Some merchants will charge you less for paying with cash to avoid credit card transaction fees.
In some cases, paying in cash can be 3% less than the purchase price.
Digital payment applications -ApplePay, Venmo or CashApp- can also work as cash payments.
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Using a credit card offers you more consumer protection than a debit card and you can also get rewards: cash back or airline or hotel points.
Choose a card with a low interest rate or a 0% introductory offer, especially if you think you can't or won't pay off your entire balance at the end of the billing cycle.
Be wary of store credit cards.
According to CreditCards.com, the average retail credit card charges more than 28% interest.
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Also, be careful if you use buy-now-pay-later products, a popular online shopping option at many merchants.
Although you can split payments on interest-free purchases, buy-now-pay-later loans aren't subject to the same rules that apply to credit or debit cards.
There are also fewer purchase protections, including the ability to dispute a charge if you purchased a good or service that wasn't delivered as promised.
5. Consider how you will contribute to charities this year and next
This year it may be more difficult to claim a charitable deduction than the previous two.
An above-the-line deduction can no longer be automatically applied for cash donations, deductions must be itemized on the 2022 tax return.
However, most people probably choose not to itemize deductions because doing so may not offer as large a tax break as the standard deduction.
For 2022, the standard deduction is $12,950 for single filers, $19,400 for head-of-household taxpayers and $25,900 for married couples filing jointly.
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Retirees have another tax-free gift option: make qualified charitable distributions, or QCDs, from individual retirement accounts to eligible charities to reduce taxable income.
Even so, getting a tax break shouldn't be the only motivation to donate.
Many charities rely on year-end donations for the following year.
One way to ensure you're giving back more regularly is to include charitable donations in your overall budget.
According to a recent Vanguard study, those who do donate four times more than those who don't in the following 12 months.