If you were surprised at how fast summer flew by, you’ll need to come to terms with the fact there are only 3 months left in the year.
Since the holiday season and New Year’s resolutions will be here before you know it, now is the perfect time to consider what you need to do financially before the end of the year.
Instead of calling it a wrap and putting money management off until next year, focus on your current finances by making these 7 financial moves before the end of the year.
1) Max Out Your Retirement Accounts
If you have retirement accounts, why not max them out every year if you have the means to do so? If you have contributions on autopilot and you’re forgetting to max out retirement accounts like your 401(k) or IRA each year, you could be missing out some compounding interest.
If you are under 50 years old and have an employer-sponsored 401(k), you can contribute up to $18,000 this year and up to $24,000 if you are over 50.
While Roth IRAs allow you up to contribute up to the tax filing deadline, you can contribute up to $5,500 if you are under the age of 50 and up to $6,500 if you are over the age of 50.
Retirement accounts like your 401(k), 401(b), and Roth IRA are all tax deductible so the more you contribute, the more interest and appreciation you’ll end up with.
The money you contribute to a Roth IRA grows tax-free meaning you won’t pay taxes on it when you make withdrawals during retirement which makes it a no-brainer to max out your contributions each year.
Don’t have an IRA? You can open one on TradeKing.
2) Get Organized
We talk about getting organized a lot on Young Adult Money, but for good reason: it’s one of the best ways to both understand and improve your financial situation.
Getting organized can be as simple as taking a proactive action like organizing your student loans in a spreadsheet (we created a free one you can use). Ultimately, though, you are going to want to track your expenses, know your net worth, and have a Budget.
There are a variety of different ways to track your expenses, from using pen and paper to using an app. Here’s six different options.
As far as getting everything organized and automated to track your net worth, nothing works better than Personal Capital. You can link all your accounts (they have top-rate security) and log in and see where you are at as often as you’d like.
Having a budget is another way to get organized since you will naturally have to keep good records and reconcile your spending each month. Similar to tracking your expenses, there are a variety of ways to budget. Consider one of these six ways to budget your money.
3) Review Your Beneficiaries
If you haven’t done a beneficiary audit this year and you’ve undergone some changes, make time to do so. If you got married, divorced, had a child, etc., you’ll need to check and update your beneficiaries for your retirement plan, insurance policies and so on.
When big life changes occur, sometimes it’s easy to put off taking care of the boring stuff like reviewing and updating your beneficiaries. Since I got married earlier this year, I’ll need to check my beneficiaries and update my will as well because things have been so busy since the wedding.
This is an important task since you’ll want to make sure the right family members are listed as beneficiaries and you’re not overpaying for coverage you don’t need if your assets have changed.
If you don’t have life insurance consider making it a goal to look into it by year-end. DC recently got a million dollar health insurance policy through Policy Genius, which gives free online quotes so you have an idea of what different policies will cost you.
4) Donate
If you have old items that have been sitting around your home collecting dust, pack them up and donate them. Donating not only allows you to declutter your home and give away items that other people may find useful, it also allows you to reduce your tax liability so it’s a win-win.
If you have kids, making charitable donations is also a great way to teach them the value of giving back. Each year, my son and I declutter and deep clean his room and our main goal is to find old items and toys he is no longer using so we can donate them before Christmas.
He loves helping my round up lots of items because he knows that if he doesn’t, there won’t be any room for new holiday gifts.
Need help on how to get started? Read Cat’s post How I Decluttered Thousands of Belongings or Erin’s post 5 Lessons I Learned From Decluttering.
You can also provide a monetary donation to your favorite charitable organization. If you make charitable donations by December 31 this year, it will allow you to a have a charitable contribution deduction against your income tax if you itemize deductions. Just make sure you hold onto your receipts. You can start small with donating to charity; a little goes a long way.
5) Top Off Your Emergency Fund
Once you get your emergency fund balance to a reasonable number, it’s best to maintain it so you may need to replace funds that you use throughout the year. If your emergency fund has taken a hit this year or you still need to reach your goal for the year, make sure you budget to continue making contributions.
If your emergency fund is in a high-yield savings account (as it should be) that will provide even more incentive to save up so you can earn more interest on your contributions for the following months. Plus, having a fully stocked emergency fund will provide you with so much peace of mind as you go into the new year.
Having an emergency fund in a separate account will help you not use it for other things. There’s even a bank that is willing to pay you $25 for opening an account.
6) Schedule Healthcare Appointments
Have you scheduled all your preventative care appointments for the year? If you’ve already met your health insurance deductible, there’s little reason to hold off on going to the doctor throughout the remainder of the year. If something has been bothering you, you might as well check it out before the end of the year and your policy terms reset.
If you have a Flexible Spending Account (FSA), you generally have to use the money within the year. Some employers offer a grace period of 2.5 extra months or may allow you to carry over $500 to the next year but aside from that, any money in your FSA that you don’t use can go to waste.
Speaking of saving money on taxes, you will want to consider maxing out your Health Savings Account (HSA) if you haven’t already. Not only are contributions to an HSA shielded from taxes, it also can serve as a retirement account – a really, really good retirement account.
7) Contribute to Your Child(ren)’s 529 Plan(s)
Funding your child’s college education is a priority for many parents. A 529 plan is a great option in terms of socking away enough money for your child to attend college. As an added bonus, it provides a great tax break especially if you don’t have many deductions to make in the first place.
Contributions grow tax-free and depending on your state, joint contributions can also be tax deductible. Unlike Roth IRAs, there are no income limits, age limits, or annual contribution limits.
If you contribute anywhere from $14,000 to $70,000 for a beneficiary, you can elect to treat the contribution as made over a five calendar-year period for gift tax purposes.
There’s Still Time
While there still may be quite a few financial moves you need to make before the end of the year, the good news is that there is still time. As you prepare for the holidays, don’t forget to cross these items off your list just as you cross gifts and other items off your list for your loved ones.
Making sure your finances are organized and you’ve updated and maxed out your accounts will allow you to enjoy a fresh start during the new year instead of feeling like you’re behind.
Here’s some helpful articles that will help you improve your finances:
Do you need to make any of these financial moves before the end of the year? Have you already completed anything on this list?
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Awesome tips! Glad to see that I’m doing most of these, but I probably do need to review my beneficiaries, and make sure everything is good to go… and… scheduled healthcare appointments, especially since we’re leaving the country this winter. Lol. Thanks for the tips, Chonce!
Thanks Kalen, glad you liked the reminders! I have a dentist appointment I need to schedule this year and hopefully before the holidays.
I’m about to do most of these things by the end of the year. Because we have Solo 401(k) plans, we get to contribute an additional 25 percent of our business income to retirement at the end of the year. Obviously, it’s hard to predict an exact percentage until you calculate your exact earnings. I’m also going to put more money into our kid’s 529 plans. Indiana offers a 20 percent tax credit on the first $5,000 you contribute each year.
That’s a nice tax credit for the 529 plans. It sounds like it will be nice to add to your retirement accounts by the end of the year.
We’re set to get most, if not all, of these taken care of by the end of the year. Like Holly, we have a Solo plan, so we’re just working to get the additional 25 percent knocked out and should have that done within the next month or so. With us moving this year we’re still making a lot of donations as we’re finding things we no longer need.
Since I’ve been decluttering throughout the year, we’ve found a lot of things we no longer need or want so I’m trying to donate some of our stuff as well by the end of the year.
I just updated all my spreadsheets and documents I use to track my networth, salary, savings, and insurance. It was a great exercise that I recommend to everyone.
I love organizing things in spreadsheets. I’m about to go over some dreaded tax documents and organize all my receipts for next year.
Thanks for the reminder…just opened a 529 plan for baby #2. My state has a deduction if you contribute so that’s a good benefit. As for donating stuff…I was weighing whether to try and sell online or donate, but I might just donate some items, because it can be time consuming to sell. I did mention have to little ones right? =) Another reason is I generally sell on Amazon and there are restrictions with them when you get close to the holiday season.
That’s awesome you opened another 529 account for your little one :) We usually try to sell at first and donate what we can’t sell. I didn’t know Amazon had seller restrictions around the holidays, good to know.
I feel like around fall people get serious about their goals again. They had fun during the summer, and now things are getting serious so they want to get back to their resolutions.
Very true. Once summer is over people tend to get into ‘grind mode’ for a bit then wind down around the holidays.
This is a great list. Since I started work in mid July I didn’t really have the means to max out my retirement accounts and HSA. I’m going to get pretty close to it (about $15k by the end of the year in both my 401k and HSA) but I know I can do better. Next year is when I’m going to max it out, without fail!
It’s great that you’re doing what you can this year, that’s what counts!
“Get organized” is my biggest challenge. My financial brain was chaos before we started our journey out of debt in ’12, and while I’m on board with the joint account and expenses, chaos still reigns in my discretionary money. Your post is a timely reminder. I shouldn’t wait until the New Year to deal with this. Good advice all around.
Thanks Ruth. I really like to take time off around the holidays to be with family and relax. Then I’m slow to get back to the daily grind in January, so this list is in the forefront of my mind right now :)
I love doing big donations at the end of the year. It feels good to give back and reduces our tax burden as well. Great list, Chonce!
Thanks Laurie! It does feel so good to give back especially toward the end of the year because of the holidays. Back when I didn’t have much money, I used to sign my son up for holiday wish lists so he could get a few gifts he wanted. Last year was our first year sponsoring a child ourselves and donating a gift and now we plan on doing that every year :)
Great tips! We’re set to max out our tax advantaged accounts this year. We did have to scale back the monthly contributions to the 401k to ensure we get the company match on the last paycheck of the year though. Don’t want to miss out on free money!
I need to build the emergency fund up a bit. The biggest thing I need to do is get organized though. We’ve had many changes to our finances this year and have more coming in the next year – organization is a necessity. Thanks for the reminders!!!
No you definitely don’t want to miss out on the match. I’m going to make sure my husband does everything he can to get his this year.
The beneficiary tip is huge, and it’s pretty easy to do. Just need to check a few boxes and put a name down. I heard a story about a guy who passed away and still had his ex-wife as his beneficiary for all of his accounts. His second wife was not too happy about that!
That sounds awful! And you’re right, it’s not too hard but for some reason we tend to put off small things like that.
Great reminder for reviewing beneficiaries. I had to recently update some forms to include my wife and daughter as I still had my parents listed from when I was single.
Getting organized is also very important and a constant challenge for me, especially with the holiday season approaching. This past weekend I took some time to get our tax records straight for expenses over the past couple months. I know if I do not get certain things finished before Thanksgiving, I will be scrambling at the last minute in 2017.
I’m going to start going over my tax stuff before the end of the year. Getting organized can seem overwhelming at first but you just need to set up the right systems and processes and take it day by day.