Not only is this the season of giving, but giving is proven to be beneficial to your well-being. Further, charitable donations reduce your taxable income. You can also donate household items to Goodwill or Salvation Army. Just remember to get a receipt for tax purposes. If you are looking for a worthy cause, last call that I am fundraising for the International Rescue Committee on behalf of refugees devastated by war. Collectively we have raised over $700!
2. Maximize your retirement accounts.
You can contribute up to $18,000, or $24,000 if you are 50 years or older to your 401(k).
3. Utilize all of the funds in your flexible spending accounts.
Remember to use all of the pretax money you set aside for health care, day care, or commuter funds. Deadlines are either year-end or March 2016. But I try to just tell myself by year-end so I don’t miss out.
4. Review recurring expenses.
Most financial advisors tell you to create a budget, but I have never in my life been able to maintain or be able to stick to a budget. Instead, I simply scroll through my credit card statement and highlight every single expense that needs to be cancelled or negotiated (cable, internet, cell phone, home security).
5. Review your will and beneficiaries.
Make sure you’ve noted the correct beneficiaries for your accounts. If you don’t have a will, this is the time to get one. If you need a referral, email me, I’ve got a good one.
6. Get a financial advisor.
I have an MBA and I still have a financial advisor! Get one. They will make sure you are on-track. If you need a referral, hit me up. Mine is awesome with no charge for a full evaluation of your financial health.
7. Review your portfolio and harvest losses.
If some of my stocks are still in the red at year-end, they are getting sold. Also evaluate how your portfolio is performing and make adjustments.
8. Review your insurance policies.
Take a good look at your car, home and life insurance policies. Compare rates and negotiate where you can. Once again, if you need a referral, I’ve got a good one who has saved me thousands of dollars across all my policies. Also, given our ages, I have been researching long-term care insurance and I’ve been told it’s just not worth it. It’s very expensive and the value is most likely not there. One strategy I read is that if you need care when you’re old and gray and you end up depleting your savings, you can look into a reverse mortgage. Because let’s face it, you can’t take your home to your grave. So that gave me some comfort. Anyone want to comment on this strategy?
9. Remind your kids you’re not paying for college.
I’m probably in the minority here, but I personally don’t want to deplete my hard-earned retirement savings to pay for exorbitant college education. I know that’s a huge risk, but I’m betting that this one’s going to pay off. I also have a strategy here which is that if Franco does want to go to college (which he’ll have to fund himself), we will retire the year prior to him submitting his financial aid application. That way he can indicate (genuinely) that his parents have zero income and he can hopefully get massive scholarships. What do you think?
What other financial end-of-the-year tasks am I missing?