The holidays are upon us, and it's all too easy to get carried away with gift purchases and credit extensions. You might have made this mistake in the past. Don't feel bad, most Americans have!
In fact, many Americans find themselves overextending themselves nearly every holiday season. Then they spend months (or their next income tax return) trying to catch up on debt. This year, we encourage you to stick closely to your budget and keep an eye on your finances. Take a look at our year-end checklist to stay on track.
1. Make a Holiday Budget and Stick to It.
Figure out your upcoming bills and income. Take a close look at your calendar, think about your pay days and due dates. Leave some extra room in your budget for your expected time off. You might miss work for holidays, snow days or inclement weather, or sick days. By subtracting your expected expenses from your expected income, you can get an idea of what you can spend on holidays. Don't forget pesky costs like fuel, groceries, doctor's appointments or other incidentals.
2. Don't Exploit Your Savings for the Holidays
Hopefully, you've been putting a few bucks away every month for emergencies. Don't touch your emergency fund!
3. Start (or Improve) Your Retirement Plan as Your New Year's Resolution
Saving for retirement is a resolution you can feel great about keeping! If your employer offers a 401k match and you're not taking full advantage of it, make that adjustment on January 1. You can also launch a Traditional IRA account with your bank. (Traditional IRAs allow you to save up to $5,000 per year towards retirement. These savings can be deducted from your taxable income. If you're feeling nervous about your 2019 taxes, start saving in your traditional IRA)
4. Review Your Estate Plans
No one wants to think of a tragedy. If you haven't started planning your estate, now is the time to start. If there have been changes in your family this past year, you may need to change how your will is written. Also, you should consider who your insurance policies name as beneficiaries.
5. Review Your FSA (Flexible Spending Account)
If your employer offers a flexible spending account for health expenses, take a good look at it now. Some plans don't allow for carry-over from year to year. That means you could lose the money you've saved. If you find that you have funds that need spending this year, consider filling prescriptions ASAP and/or purchasing health-related consumables, like contact lens solution or orthopedic insoles if your plan covers them.
6. Make Donations to Quality Charities
You can carve away your taxable income by making donations to genuine charities this season. Ask for a charity's tax number, and research them to be sure they're legitimate before you donate.
7. Outline Your Budget for Next Year
As the year draws to a close, consider any major spends you're planning for the new year. Does your home need a new roof? Are you planning to purchase a new vehicle? We know it's impossible to prepare for every situation or emergency, that's why you have your emergency savings fund. But you'll still sleep better at night knowing you have financial goals and a plan for the big-ticket items put down on paper.