The holidays go by quickly for most people. This time of year can be a blur of gatherings, gift-buying, cooking, and general hustle and bustle. Then, soon after, December is a wrap. Where did the year go? Many of us also tend to look at our wallets and ask, “Where did my budget go?”
Budgeting through the holidays can be tough. The good news, though, is that the New Year is a fresh start for one’s finances. The end of the year is a great time to get prepared, informed, and acquainted with your finances to ensure 2017 goes off relatively hitch-free.
A smart first step to getting your finances in order at the end of the year is to find a financial planner or an accountant you can trust and set up a meeting. A financial planner can take a look at what you’ve been doing with your money – saving, investing, and spending – and help you formulate a plan with purpose for 2017. It is a financial planner’s job to help you create and stick to financial goals. The end of the year is an ideal time to speak with one to determine where you can improve with spending, if you should be investing, or how you can get closer to meeting a specific goal you haven’t reached yet. Knowledgeable accountants can help you determine whether deferring income is a good idea. It’s best to get in touch with a financial planner or accountant as soon as possible, though, in case some of their strategies (like deferring income) are time-sensitive.
Financial professionals can also help you understand how to handle your retirement contributions before the contribution period is over.
For instance, 401(k) contributions are deductible only when made during the same calendar year. Other accounts, such as an individual retirement account (IRA), have a longer contribution period (specifically, until you file your taxes in spring). It is best to plan ahead, though, and speak with a professional about your contribution plans, so you get the most out of your investment accounts.
At the end of the year, you can max out your employer’s retirement plan contribution if you so choose. Consider it your 401(k)’s last hurrah, and celebrate your accomplishment.
As you max out your investment contributions, you can also use personal accounts that have expiration dates – namely, your flexible spending account (FSA), if you use one. You may have money left that will disappear after the year’s end. Spend it or lose it!
If you’ve done the above, and spoken to a professional about where your money should go in 2017, then you should have a clear idea for what you have to spend and put away.
If you’ve budgeted wisely in 2016, then you may have some money to put toward a charity. At the end of the year and around the holidays, charities especially need contributions. Additionally, December 31 is the deadline for charitable contributions you plan to deduct from your 2016 tax return. You may have tax benefits if you donate cash or other assets to a charity. Not only can this benefit you and your tax expenditures, but you can also help a local organization and members of your community. Take care to not miss the deadline, though, if this is what you plan to do.
The end of the year is busy, but the end of the year also signals a time of renewal. Before we ring in 2017, talk with a financial expert to make sure you’re taking all the right steps to have a healthy financial future.