The end of the year is a great time to review your financial situation and start planning for the coming year and beyond. This is also a great time to take advantage of some financial opportunities before the year closes, such as year end tax deductions and retirement plan contributions. You may also find that your personal and financial situation may have changed, so you may need to adjust your previous financial plans. Let’s take a look at a few things you can do to close out the year on a high note and start the new year on the right path.
Take Stock: Review Your Personal and Financial Situation
Are you on the right path?
A lot can happen in a year – your employment situation may have changed, you may have moved to a new location, you have gotten married or had children, or you may have lost a loved one. These are all major changes and can affect the way we go forward. Take some time to reflect upon how your personal and financial situation has changed and think of ways you can create a new financial plan to meet your changing situation.
This is a good time to involve your family members and discuss your short and long term goals. This includes things such as buying a home, paying for education, getting out of debt, planning for retirement, or taking a family vacation. All of these things may be possible if you can plan for them in advance and create a plan to achieve them. This plan could include creating a budget, generating more income, relocating, finding a new job, paying off debt more quickly, investing more, or making certain sacrifices. Remember, your situation is unique, so you and your loved ones will need to create a plan specific to your needs.
More year end money moves
Taking stock of your financial situation and looking at the big picture is always a good idea. But there are also several smaller things you can do which can save you a lot of money in the long run and set you up for a brighter financial future. Some of these tips are below:
Prepare for Next Year’s Taxes
There are multiple ways you can save money on your taxes at the end of the year. Some tips include making retirement plan contributions, donating to charities, taking business deductions, selling investments to capture losses, prepaying deductible expenses such as child care, making certain home improvements, and more. Here is a list of year end tax planning tips.
Max out Retirement Contributions
One of the most important things you can learn about retirement planning is this: You only get one shot at contributing to your retirement plans. This message is important in two ways – the first is that you are only young once, and the sooner you invest, the longer you have for compound interest to work its magic. The second reason this is important is because retirement contributions are limited by the calendar year. Once the contribution deadline is gone, you can no longer contribute for that year. Take advantage of your opportunity to contribute to your retirement plans while you can. Here are the IRA contribution limits, TSP Contribution limits, and 401k contribution limits.
Review your insurance coverage
The end of the year is also a great time to review each of your insurance policies. You should consider the type and amount of each insurance policy, and think about whether or not it still makes sense for you. For example, you may need more or less insurance if you have gone through any major life events, including moving, getting married, getting a new job, etc. Once you determine the right level of insurance, it’s a good idea to compare insurance policies by getting free insurance quotes. These articles may be helpful: How much life insurance do military members need?, Save money on auto insurance rates, Save money on your homeowner’s insurance.
Start a Plan to Get Out of Debt
Debt is the number one killer of financial goals. Early retirement, buying a home, paying for college, and other large financial goals become more difficult, if not impossible, when you have too much debt. Getting out of debt can be difficult, but it isn’t impossible. It all starts with a plan, and the dedication to stick through the plan. If you don’t know where to start, then I recommend beginning with these tips for getting out of debt.
Do you have any other tips to end the year on a high note?
photo credit: monkeywing
