The Year End Financial Planning Tips
As we approach the busy holiday season, it’s easy to let attention slip from personal finance. Between holiday shopping, cooking and year end parties don't forget the most important type of planning you should do this holiday season-financial planning.
Keep holiday spending in check: Even if some of the tips below put extra money in your pocket, do your best to control holiday spending. You don’t want to start the new 2013 short on cash or in debt.
Budgets: Review your monthly budget and track your spending. Keeping track of where your money is being spent will highlight unnecessary expenses.
Retirement and Investments: Examine how much you've been putting in your retirement accounts this year. If possible, plan to contribute the maximum allowable amounts to your retirement accounts and/or increase your regular contributions. Also, now is the time to start thinking about selling a long time underperforming securities for capital loss deductions and asset allocations adjustments. If you have realized capital gains from the sale of stocks or mutual funds, talk to you accountant. Taxes should never be the sole reason you buy or sell investments, but it may be possible to improve your tax and your investment situations at the same time. When rebalancing your investments, always seek a professional advice from financial advisor.
College planning is essential for every family. If you have not started preparing for future college expenses; start now. College savings plans can offer considerable tax benefits.
Use up expiring funds: If you have a Flexible Spending Account (FSA) for dependent care, healthcare, or transportation expenses, the funds may be expiring at the end of the year. If they’re not expiring on December 31, they will almost certainly expire by March or April. Purchase additional over the counter medicines if necessary to use up funds in your healthcare FSA.
Maximize health insurance benefits: If you have to meet an annual insurance deductible and know you have medical (or dental or vision) expenses coming up, try to schedule the appointments before December 31st. If you’ve met your deductible for the year, they’ll cost you less now than they will at the beginning of next year when your deductible resets.
Maximize your itemized deductions: Make donations in the form of cash or property. If you are donating appreciated stock, you may also decrease capital gain taxes. If you’re self-employed, and know you’ll need to buy deductible business-related items in the following year, you may want to buy them now to maximize your deductions in the current year (and take advantage of holiday sales).
Take stock of year behind: Take the time to reflect on the year that will soon be behind us. It’s not too late to make corrective actions and make improvements to your overall financial picture. Ask yourself:
What have I done to improve my financial situation this year that I am proud of?
What other immediate steps can I take to maximize my financial recourses?
What biggest lessons I learned about myself in managing my money this year?
What are my financial goals for the next year?
What new habits do I want to cultivate?
This time of year is a good time to devote to cleaning up your finances. You need to adjust for things that happened this year and plan for things you want to happen or that could happen in 2013. Don’t try to take these actions at once. Spread them over a few weeks. It will be manageable, and you’ll be more financially secure at the end of the process.