Benjamin Franklin said: ” If you fail to plan, you are planning for failure”.
Financial planning is a year-round activity, but taxes are a real season! There is always a rush to get things done at year’s end. Navigating life events through the seasons is often best managed by a financial professional. However always arm yourself with your own research and knowledge. You may choose to call it a resolution rather than a plan but make no mistake successful money management requires a plan. Begin by writing down your goals. Are you a more visual mind? Paste a picture next to the written goal. Develop steps necessary to reach your goals – if a cruise is your end goal, save $200 per paycheck so that by next December there will be $4,800 saved for the vacation. Using the automatic transfer feature with your bank is another idea. Set a reasonable time frame to review your plan, monthly may work best. Monitor your goals and keep them to a manageable minimum. Select three or four goals to focus on.
And most importantly Don’t give up!
Here are 8 year end tips help prepare for the financial year ahead.
- Donate to your favorite charity – The holidays offer a good opportunity to clean out your physical and financial closets and make tax-deductible charitable gift. Please consider www.angelsrwatching.org.
- Contribute the maximum amount to your 401(k) – $18K Under 50 – Age 50 and over $24K – You have until April 17th 2017 to contribute for the 2016 tax year.
- Consider converting your Traditional IRA to a Roth IRA
- Harvest investment losses.
- Make tax-free gifts – up to $14K per year ($28K from a married couple) to as many individuals as you like and not incur federal gift taxes – the recipient will not have to treat the gift as taxable income.
- Fund 529 college savings plans
- Cover health care costs efficiently – there are two types A Health Savings Account (HSA) or a health Flexible Spending Account (FSA) Be certain you understand the rules for each of these.
- Prepay next year’s deductible expenses – Mortgage payments or Business expenses or Charitable donations.