6 items for your end-of-year financial checklist

By Altelisha "Lisha" Taylor, MD, MPH
Published November 22, 2023

Key Takeaways

  • With the final days of the year approaching, taking care of your financial responsibilities early on will save room in your schedule for holiday down-time. 

  • Be sure that you’ve contributed the annual maximum to your retirement accounts, and increase your tax withholdings if you’ve made extra money from a side gig. 

  • Set some budget boundaries around your holiday spending to avoid credit card debt, complete your charitable giving, and consider investing money through the backdoor Roth IRA. 

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.)

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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. 

Related: Retirement investing: Everything you need to know

Contributing the maximum to these pre-tax accounts can save a physician over $6,000 a year in taxes. Many people also get a “match” or additional free money from their job to invest in these accounts. 

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

"Be sure to take full advantage of your financial potential by maximizing your retirement account contributions."

Lisha Taylor, MD, MPH

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. 

Related: 12 compensation types beyond salary to negotiate in your contract

"Instead of keeping things the same, take a look at your options and see if another health insurance plan may better suit you."

Lisha Taylor, MD, MPH

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. 

Related: 6 money mistakes to avoid as an early career attending physician

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. 

This type of account has several benefits. You don’t have to pay taxes on any profit you make in the account. You have lots of different investment options to choose from. You can control how often you contribute money to the account. Plus, you can take out the money you contributed at any time tax-free, with no penalty.

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. 

Related: From residency to retirement: How compensation changes over a physician’s career

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. 

Making extra money can be great, but you still have to pay taxes on that revenue. Unlike the money you get from your job, many side gigs do not take out the taxes from your paycheck.

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. 

"While these things can add immense joy to your lives, be careful. The costs can add up quickly."

Lisha Taylor, MD, MPH

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.

Donations made by the end of the year can be used to lower your taxable income and your overall tax burden when you file your taxes next April. Although you shouldn’t give money away just to receive a tax benefit, getting a reward for your generosity doesn’t hurt, especially if you were going to give the money anyway. 

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

What this means for you

The end of the year is quickly approaching. As you prepare for the holiday season, don’t forget to complete this financial checklist. Max out your work retirement accounts, complete the open enrollment at your job, and change any tax withholdings if needed. Also, consider completing your backdoor Roth IRA to simplify your tax filings, set your budget boundaries to avoid debt, and donate to charity. 

Read Next: Investing 101: 5 steps to build passive income

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