2018 is only a couple weeks away! It’s always good to close out the current year in the best way possible before you dive into a new one. Here are some year end financial tips to help you wrap up 2017 and launch your new year feeling organized and prepared:
1. Take a Minute to Reflect
One of the biggest mistakes you can make is to forget to reflect on the ones you made already. You don’t need to stew or dwell on your mistakes, but it’s smart to take a look at where you fell short this year so you can fix those behaviors in 2018.
Perhaps more importantly, what went right this year? Where did you make real progress? Use those strengths to guide your resolutions and set up a game plan.
2. Rebalance Your Portfolio
The way you allocate your assets can make a huge difference on your returns over time, so it’s important to check up on how your portfolio is balanced. What worked for you in 2017 might not apply in the year ahead, especially if you experienced any major life changes like getting married, having a baby or retiring.
Check it over to make sure you’re comfortable with the current level of risk, and that you’re not hoarding money in any one asset.
3. Charitable Giving
Tis’ the season to be giving. Many people donate to charity this time of year. Whether you give consistently all year long or you do the bulk of your donating during the holidays, get your donations in by December 31st.
You can deduct any 2017 donations on your taxes in the spring.
4. Max Out Your 401(K)
One of my top year end financial tips is to max out your retirement accounts. Do that now to help save even more on your tax bill, while boosting your retirement savings. Your 401(k) is a great place to invest your year-end bonus if you haven’t hit that maximum level.
5. Check Your Beneficiaries
It’s a good idea to check over all of your benefits every year, usually during open enrollment. If you haven’t already, you should also take some time to double check who you have listed as a beneficiary. Check up on your retirement accounts and life insurance policies to verify that the correct names are listed on those accounts.
This is especially important if your company has changed its 401(k) provider, or if you got married or divorced within the past year.
6. Do Tax Loss Harvesting
Here’s another of my year end financial tips to save money on your tax bill: sell the investments that are worth less than they were when you bought them.
This is called tax loss harvesting, and it is typically worth a tax write off of about $3,000 per year against your income. Just be aware you won’t be able to buy back your investments immediately because of wash sale rules.
7. Prepare for Tax Season Now
You can save on your tax bill by making some smart moves now. You still have time to cut down on what you owe at tax time. Here’s a recap checklist of what you can get done by Dec. 31 to save money:
- Donate to charity
- Contribute to pre-tax accounts like a Health Savings Account (HSA) or 401(k)
- Sell your losses
- Pay estimated tax on any big bonuses or buyouts
Cut down where you can, and try to estimate your overall tax bill now. Know your tax bill amount ahead of time so you can prep for that payment when April rolls around.
8. Set SMART Goals
One of my favorite year end financial tips for setting any goal, financial or otherwise, is to make your goals SMART.
SMART goals are specific, measurable, action-oriented, realistic and bound by a time limit. So many goals or resolutions fall apart quickly because they’re not well thought out, or they’re too vague. This is the way to tackle those big goals you hope to achieve.
Take some time at the end of the year to look over your finances and think of where you want to be in the future. Think of some shorter term and longer term goals. Then get specific to stay focused. What is it you want to achieve, when do you want to achieve it, and what actions can you take to get there?
Make your goals SMART and you’ll have a game plan to tackle them when 2018 rolls around.
About Your Richest Life
At Your Richest Life, Katie Brewer, CFP®, believes you too should have access to financial resources and fee-only financial planning. For more information on the services offered, contact Katie today.