Even the best financial plans can be tough to stick to during the holiday season. No matter how careful you’ve been all year, it’s tempting to splurge on some of the things that make us happiest: good times with friends and family, travel, entertaining, and generous gift-giving to friends, loved ones, and favorite charities.
Here are 9 end of year tips to help make sure you’re still on target with budget and strategy and help keep important goals in mind if you’re tempted to go over budget during the holidays.
- Review your budget: See where you can scrimp a little so you have more to spend on holiday fun. Bring lunch to work, skip bottled water or sodas, or take public transportation, for instance and use the money for holiday treats, travel, or gifting. Seeing where you can cut spending may give you some ideas about how to live more frugally in 2016 so you can pay down debt faster or increase your savings significantly.
- Max out your 401K: Before the end of the year, take full advantage of your company’s matching program. Those matching funds are the gift that keeps giving through the power of compound interest.
- Use your Flexible Spending Account: If you have a flex account for healthcare, transportation, or dependent care, try to use your yearly allowance before the end of the year. Cash in on that new pair of glasses you’ve been wanting. If you didn’t use it all – or if you’d already spent it all by May – rethink what you should set aside next year.
- Take a look at this year’s tax refund: Decide if it makes sense to reduce how much is withheld from each paycheck. By reducing your withholding you’ll have more money in 2016 for investments, savings, and next year’s holiday spending, instead of lending it, interest-free, to Uncle Sam.
- Talk to your financial advisor: Whether having a conversation about converting from a traditional IRA to a Roth IRA or what to declare next year on your taxes, the end of the year is the right time to make new financial decisions. Your financial advisor can also help you determine if you have assets that are either above or below your target allocation. If you’re selling at a loss, you can take advantage of a tax write-off!
- Review your insurance policies: Review any changes in your circumstance or property to make sure you have the right amount of coverage for all contingencies. At the same time, make sure you’re not over-paying for coverage you no longer need.
- Give to your family: You can give up to $14,000 each to family members with no gift tax or reporting requirements, and the recipient doesn’t pay any tax either.
- Give to charity: Before the end of the year, charitable donations are not only a great way to express your values, they are also a good way to increase your itemized deductions.
- Save for the kids: Consider giving children or grandchildren an investment in their future and a first lesson in investing by contributing money to a 529 College Saving Plan! They can use the extra dollars tax-free for college tuition, room and board, and you get a state income tax deduction for your contribution.
While it’s better to give than receive, don’t leave any free money or tax advantages on the table! Review your budget and see if you can add a line item for next year’s holidays so that December 2016 will be the happiest and most stress-free holiday season ever.