Get organized now so you can achieve your financial goals in 2020.
By: April Lewis-Parks of Consolidated Credit
If you’re like many people, your finances aren’t high on your list of priorities now. According to the National Retail Federation, the average family expects to spend over $1,000 on Christmas this year.
So, it’s no wonder that so many people make a conscious decision to ignore their budget and avoid looking at their credit card balances until after the New Year.
Still, as much as that might make you feel better in the moment, it can lead to a serious holiday debt hangover come January. You could find yourself reeling from how much you spent and just how much debt you have to pay off. Luckily, KOFE is here to help with some practical end of year financial tips you can use now to avoid a financial headache in the New Year.
Tip No. 1: Look back at how 2019 has shaped up for your finances
The first step in making an effective plan for next year is evaluating how you did this year.
- Did you make any financial resolutions, such as paying off debt or improving your credit? If so, did you reach them?
- Did you achieve any financial goals that you set for yourself?
- Do you have more or less debt than when you started the year?
- Do you have more or less savings than when you started?
- Has your credit score increased or decreased?
Answering these questions helps you assess your progress over the past year, so you can make adjustments to your strategy for 2020.
Tip No 2: Review your accounts
This includes your checking and savings accounts, credit card
accounts and any investment accounts, such as your 401(k).
- How many fees did you pay on your accounts?
- Did you ever overdraft on your checking account? If so, how many times?
- How much money did you earn on your savings account and investments?
Looking at fees and earnings can give you a good idea of if you need to shop around for new accounts next year. If you paid a high volume fees on your checking account, you might want an account with low or no fees. If you overdraft often, then you might be better with an account that offers overdraft protection.
On the flipside, if you didn’t enjoy healthy earnings this year on your savings, it might be time to consider investments. You may need to set a goal for next year of looking into cash equivalents that offer better rates than your basic savings accounts. (Cash equivalents are investments that offer higher rates of return than basic savings, such as CDs.)
You may also want to look at your insurance policies to review if they’ve provided the coverage you need. You can also assess if you’ve overpaid and purchased more coverage than you need.
Tip No 3: Keep your tax returns in mind
If you want to qualify for certain deductions and tax credits, you have a limited window of time left. In most cases, as long as you take action before December 31, 2019, then you can make the claim on your 2020 tax returns.
- Charitable donations
- IRA retirement account contributions
- 401(k) contributions
Tip No. 4: Don’t forget your flex spending accounts
Many employers offer flex spending accounts that can cover things like child care, medical costs and transportation. These accounts avoid income and Social Security taxes. However, most of these accounts follow the “use it or lose it rule.” Basically, unless you spend the money you put in at the beginning of the year, you’ll lose it.
So, if you put any funds into a flex spending account, check the balance. If you still have funds left, find ways to spend them before they’re gone.