The holidays are fast approaching! Whether you’re getting together with family, enjoying some time off, or preparing for the New Year, the holidays are a great time to reflect on the past year. (This can include evaluating your finances as well.) Since thinking about your finances during the holidays might not be ideal, we’ve done the heavy lifting for you and prepared a financial checklist you can use to help you stay on track.
Reset your finances for the New Year
When you get some downtime, start reflecting on your financial milestones for the year. Did you buy a house? Did you buy a car? Did you get married? If you find that you’re not saving as much as you’d like, think about refinancing your high-interest debt. One way you can do this is through a low-interest personal loan, which allows you to consolidate your debts into a single monthly payment.
Creating a savings plan is also something to take into consideration when thinking about your finances for the upcoming year. Even if you put a little bit of money aside every month (whether it’s contributing to your retirement plan or saving for an emergency) this will make a huge difference in the long run.
Max out retirement plan contributions
401ks and Roth IRAs can be great sources of tax-free retirement income. If you have a 401k plan through your employer, this is a great time to evaluate what you’ve contributed this year, in addition to how much your employer has matched your contributions, if applicable. You might even want to consider increasing your 401k contributions an extra 1% starting January 1—keep in mind you’ll need to set this up in December in order for this to take effect.
Also, assess the money you are setting aside for retirement is going into the right accounts.
Check your FSA balance
If you contribute to a Flexible Spending Account (or FSA), double-check the policy about what happens with the money you don’t spend. Many FSA’s have a “use it or lose it” policy, so you’ll want to be smart about how much money you set aside to begin with. Keep in mind, some employer plans will give you a 90-day grace period to use up your remaining FSA balances after the calendar year. If you still have money left over, consider using it for applicable medical expenses before the year-end, which can include:
- Chiropractic treatment
- Mental health treatment
- Prescription medications
- Birth control
- Deductibles, co-pays, co-insurance
Review your credit report
Did you know that 1 in 5 Americans find errors in their credit report? Checking your credit report once per month (especially at the end of the year) could help you prevent hits to your score and fix costly mistakes. Plus, don’t forget you are entitled to a free three-bureau credit report once a year from annualcreditreport.com
Review your charitable contributions for tax refund credits
The end of the year is a great time to donate to charities, and it’s a way to reduce your taxable income. TurboTax has a tool called ItsDeductible that allows you to track your deductions on the go with the mobile app. Here’s a couple of things to keep in mind when it comes to charitable donations:
- In order for a donation to be tax-deductible, make sure to donate to an IRS-approved nonprofit organization
- Retain tax receipts to write off any cash contributions of any amount
- You may be able to get a deduction for expenses related to volunteer work, including parking, public transportation, and supplies
By taking these steps, you’ll be on your way to conquering your finances for the New Year in no time!
Written By: Samantha Tollin
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