The holiday season is fast approaching with all of its pleasures and aggravations. But in the whirl of activity, we strongly recommend that you set aside some time to do a bit of financial housekeeping.
By checking off the items on the list below, you may help put yourself in a better financial position in the long run. And in the short term, you just may enjoy your holidays a little more.
- Dust off your budget. You may or may not have followed your budget faithfully this year. If you spent and saved exactly according to plan, well done—you’re a personal finance success story. If you’re like the rest of us, use your shortcomings to build a better budget for the coming year. If you’ve spent $1,000 a month rather than your budgeted $500, for example, you should plug in the real number for 2015—or resolve to eat at home a lot more.
- Sell your losers. By selling investments that are down for the year, your realized losses can be used to neutralize tax liabilities from winning investments or even from a portion of your ordinary income. If done properly, tax-loss harvesting can save you a significant amount in taxes, and you can put that money to work by reinvesting it.
- Cover your risks. Year’s end is an appropriate time to review your insurance coverage. If you’ve added or deleted family members, or if your life has significantly changed in other ways, you may have too much or too little. While you’re at it, it’s smart to gently broach the topic with older parents. If they lack adequate long-term care coverage, for example, your family could end up supporting them to the detriment of your own financial wellbeing.
- Update your beneficiaries. Outdated beneficiary designations have caused untold consternation for countless families. If you have married, divorced or added family members recently, be sure that your benefits and assets are now earmarked for the person you want to receive them.
- Make a donation. Charitable contributions can help lower your tax bill. But don’t wait until the last minute to decide on a recipient. Take the time now to decide which causes you’d like to support—and use the opportunity to involve and educate other family members about the process. It may just increase those holiday good feelings.
Remember that we are here to help you handle these end-of-year tasks quickly and confidently. Don’t hesitate to contact us for assistance.
