With just a couple months left in this calendar year, households all across the world are starting to think about financial New Year’s resolutions. The thing is, you don’t have to wait until 2016 to start getting your money matters in order.
After all, the holiday season brings with it all kinds of expenses — both the planned-for and the unexpected variety. If you want to make sure you and your loved ones start the holidays off right, take a look at the following tips to help get your financial life working like a well-oiled machine — before you ring in the New Year.
Make a Budget
If you take nothing else away from this article, at least remember this: Make a budget.
Seriously. Do it now. If you don’t yet have a household budget, you’re missing out on some priceless peace-of-mind. Creating a budget will give you a clear picture of your monthly expenses, and it will help you track income as it rolls in. The result is a comprehensive portrait of your financial standing and some much-needed guidance about how much you have leftover to save for a rainy day.
If you need a place to start, check out these worksheets, courtesy of American Consumer Credit Counseling. There’s something for everyone, whether you’re completely unfamiliar with budgeting, you want to save for retirement or you just need a little bit of help keeping track of daily expenses.
Maximize Your 401(k) Contributions
If, like many Americans, you’re gainfully employed at a company that provides retirement assistance, a big part of getting your financial house in order is making sure you’re taking full advantage of your employee benefits.
For most employees, this means maximizing your monthly contributions to your 401(k). Most retirement savings accounts allow you to contribute as much or as little of your monthly paycheck as you’d like, and employers will often match your contribution, up to a certain amount. Find out what that amount is, and make sure you’re putting in at least that much. If you’re not, you’re leaving free money on the table!
Retirement accounts aren’t just a great way to store up a nest egg for retirement, either. They also provide benefits in the form of tax savings. According to Canal Capital Management, employees can “defer up to $18,000 per year, or $24,000 if you’re over 50.” This can result in significant savings come tax time.
Meet With Your Financial Advisor
If you’re really feeling lost when it comes to household or personal finances, it may be time to get some professional help.
Those of us who make use of financial advisors are likely in contact with them on a regular basis, but the final months of the year are a particularly good time to have a more comprehensive meeting and really get into the nitty gritty of managing your assets.
Experts will tell you that the months of December and January offer the best opportunities to get some face-time with your financial planner. This will help you close out the year in good standing and get the New Year off to a strong start.
It’s also a perfect time to start thinking about long-term investments and expenses, which you can pay into throughout the coming year. This might include starting a college savings account for your children, anticipating significant changes to your insurance coverage or planning for a coming shakeup to your professional career. Whatever the future might hold for you, it’s probably worth your time to get some guidance from a professional.
Remember to Use Your Flexible Spending Account
There is one thing far too many Americans neglect: their flexible spending accounts. This won’t apply to everybody, but if your company’s health insurance policy provides a flexible spending account, or FSA, failing to use it by year’s end might mean you’re leaving a considerable amount of money on the table.
Federal law says that employees may roll over a maximum FSA balance of $500 into the near year, but it’s up to the employers to allow this or not. Some employers will also allow a grace period after the new year starts, but not all will.
Either way, it pays to have the full scoop on your FSA account. If you anticipate having leftover funds at the end of the year, and you’re required to use it or lose it, make sure you put this money to good use.
You can use your FSA for a variety of things like dental work you’ve been putting off, a new pair of glasses, a supply of contact lenses or in some cases, even over-the-counter medicine. Have a chat with someone in your HR department to get the full story.
I hope you’ve found this end-of-year checklist helpful. With just a little bit of foresight and follow-through, you can start the New Year off on the right foot. If I missed anything, feel free to sound off in the comments with your own financial suggestions!