The year is quickly coming to a close and there’s New Year’s resolutions aplenty.
However, with resolutions being so open-ended, it’s easy to pile too much on at once and while you may feel motivated at first, fast forward a few weeks or months and you may find that you’ve thrown caution, boundaries and rules to the wind and are in the exact same position you want to get out of.
Rather than resolving to change in 2017, there’s still time to opt for buckling down and getting things done in 2016. In many instances, the end of the year closes a financial window or opens a new door. Are you ready to wrap up your loose ends and set yourself up to take advantage of any opportunities the New Year brings?
Here are 13 financial moves you should consider making before the end of the year:
1. Top off your 401(k) or employer-sponsored retirement account. Whereas you have until April 17th, 2017 to stash away money for 2016 into a Traditional or Roth IRA, you only have until December 31st to get your employee contributions into your company’s retirement plan. Are you sitting on cash in your savings account that could be better used here? Bump up your 401(k) contributions through year-end and use the extra cash in your savings account to replace the missing money from your paycheck.
2. Open a retirement account and fund it. The majority of Americans aren’t saving enough for retirement. If you want to be the exception, you have to do more than just open an account. You need to also save into it. If you create a Traditional IRA account (instead of a Roth), you’ll be able to deduct any contributions before on your 2016 taxes.
3. Make a charitable contribution. If you want to give to charity, do it before December 31. You’ll get credit on your taxes for 2016, and you’ll feel good about giving away part of your income. Make sure to have a receipt for tax purposes.
4. Reduce your taxes on investment gains. This is called tax-loss harvesting. While you shouldn’t undercut your investment plan or goals to reduce taxes, tax-loss harvesting is when you offset the taxable capital gains that you’ve had throughout the year on your investments by selling investments that have lost value. The realized capital losses help to reduce the taxes owed on the gains. This has to be done by December 31st.
5. Spend down your Flexible Savings Account balance. It’s time to use it or lose it. Some employer-offered flexible savings accounts require you to spend all the money you’ve accumulated over the year before December 31. Don’t let this money slip through your fingers simply because you didn’t visit the doctor enough. Not sure what you can spend your flexible savings account on? Check out this list of approved expenses.
6. Review your withholdings. If you’re getting a big refund each year, you’re essentially giving an interest-free loan to the government. Wouldn’t you prefer to have that money back in your pocket each month to use towards funding your goals? Review your withholdings and adjust up or down as needed on your W-4.
7. Create a Holiday budget. Every year, holiday shopping puts millions of Americans in debt. The important part is that is doesn’t have to. This year, look at your finances and budget how much you can afford to spend on Christmas. Then stick to it. It’s ok if you have to scale back to stay on budget. Going forward in 2017, start a holiday savings fund in January and stash away monthly. This will ensure you don’t wreck havoc on your finances come December.
8. Establish automatic savings for your goals. Instead of relying on yourself to save manually, try creating automatic transfers to a savings or retirement account. You can use apps like Digit or set up transfers to a separate account at a different bank.
9. Sign up for a rewards credit card. If you can trust yourself with a credit card, opening up a cash-back or travel card can help you earn great rewards on money you’re already spending. Some people travel for free based solely on credit card rewards – a nice option if you’re resolving to travel more in 2017.
10. Start making extra payments toward your debt. If you want 2017 to be the year you become debt free, start putting extra money on top of your minimum payments. You can start small and increase the amount over time.
11. Track your expenses. It’s easy to spend money when you have no idea what you’re doing. Track your expenses for a few months and see what changes you can make and where you’re overspending. Try cutting at least one service or negotiating to a lower rate. Use the difference to save for retirement or pay down debt.
12. Talk to a financial planner. If you’re unsure that you’re saving enough for retirement, talking to a financial planner can assuage your fears and make you feel more prepared for your golden years.
13. Sign up for term life insurance. If you have other people relying on your income or have a mortgage with your spouse, term life insurance is a necessity. The sooner you sign up for a plan, the lower your monthly payments will be.
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