December is typically a whirlwind of shopping, gift giving, and getting together with family and friends. In between all the obligations and social events, take some time to review your finances. Whether you want to reduce your 2016 taxes or be more prepared for your retirement, there are several things you can do this last month of the year to help you reach your financial goals.
Each month many of us just mindlessly pay our bills without actually looking at the itemized charges. Now is a great time to really scrutinize what you are paying for energy, cell phones, cable TV, gym membership, etc. Are there areas where you could cut back? Is there another provider you could use that would save you money and deliver more value? Start 2017 right by being mindful of where your dollars are going every month and taking steps to spend less where possible.
Even if you can’t contribute the annual maximum to your 401 (k) account, try to put as much as you can in your account before the end of the year. You’ll boost your retirement savings and reduce your taxable income for 2016. You may also want to consider changing your paycheck contributions. It doesn’t have to be a dramatic change – even contributing an additional $25 per paycheck to your 401 (k) will make a difference over time.
If you have an FSA account for healthcare expenses, don’t waste any funds that need to be used by December 31. Check your FSA balance. If you still have money in your account, consider making that physician, dentist or eye doctor appointment you’ve been putting off. You can also use your FSA cash to purchase FSA-eligible over-the-counter items. For additional ideas on how to spend your FSA money, read this Money article.
Donating to charity is a wonderful way to help others – and it can help you as well. If you itemize your deductions on your tax return, your charitable donations to tax-exempt 501(c )(3) organizations can count as a deduction against your income tax. Regardless of your donation amount, you should always request a receipt. For claim deductions of less than $250, the IRS will probably not ask for receipts but you should have them just in case they have a question. The IRS does require receipts or other written acknowledgement (not a cancelled check) of any donations of $250 or more.
Incentivize yourself to save more by identifying your next big financial goal. Is it a down payment on a house? A new car? A family vacation? Once you have a clear, concrete objective, devise a plan for how you will achieve your goal. Maybe it’s setting up an automatic savings account, taking on odd jobs, or cutting back on some expenses and socking away the savings. Whatever your strategy, make sure it is realistic and doable.
The year may be coming to a close but there is still time to take control of your 2016 finances and prepare for a great 2017 and beyond!