As we reach the end of the year, you may start planning your calendar for the upcoming year. From scheduling vacations and doctor’s appointments to household maintenance, we often use the end of the year to map out a plan for the coming year to help us feel less stressed out and more prepared for what’s to come. One thing many people neglect to think of as they wrap up the year is their finances. You should treat your finances like you would any other important life event and plan to look at them at year-end so you can plan for the coming year and adjust as needed. Here are some items you should plan to look at during your year-end financial checkup.
Adjust Your Budget
Take a thorough look at your budget for the year to see what you’ve done well and what areas you could improve. Use your existing budget to build upon for the coming year’s budget. If you’ve had any significant changes to your income or expenses, these should be reflected in your new budget for the coming year. Perhaps you’ve paid off a major bill or seen a significant increase in your income. These could have a major effect on how you spend or save your money, so don’t forget to account for these changes as you adjust your budget. If you don’t have a budget in place, now is a great time to start one so you can begin the year fresh with a plan
Maximize Retirement Contributions
If you have enough income to spare and are looking for a good use of your money, you may want to consider maximizing your retirement contributions. You can check with the IRS to see what the yearly limit is. Saving is never a bad financial decision and can offer you a more comfortable retirement when the time comesPlan to Save
A good rule of thumb is to have anywhere between three to six months of your yearly salary in savings to help you out if something happens, such as job loss, unexpected medical expenses, or a major home repair. Check your savings to see if you have enough put away, and if you don’t, you may want to consider adjusting your savings contribution accordingly.
The end of the year is a great time for charitable giving, as it can help you offset your taxable income. However, be careful where and how you give to charity, as some may not offer the same tax benefits. Before you give, check with the IRS or your tax advisor to see what income limitations or tax implications there may be.
Adjust Your Insurance
The end of the year is also a good time to check in with your local insurance agency to see if you’re getting the best insurance for your money. If you aren’t already, you may want to consider taking advantage of certain insurance savings such as bundling or military discounts to save you additional money. If you’ve had a major life event such as death, disability, or addition to your family, you’ll want to relay that information to your insurance provider as well so they can make adjustments to your policy.
Use Your Flex Account
If you have a flexible spending account (FSA) through your employer, make sure you take advantage of the money in the account before the end of the year or you may risk losing the balance. Some employers may offer a grace period or allow you to roll over a portion of your money into the new year, so check with them so you understand how to best maximize your money.
Don’t wait to check in on your finances. Using these tips, you should be in good shape to start the new year off right financially.