Whether we like it or not, the end of the year is upon us. The fall and winter months are typically filled with fun activities with friends and family, especially around the holidays. It’s understandable then that planning your finances for next year may be the farthest thing from your mind right now.
However, if you start planning your 2018 finances now, you can hit the ground running for next year – setting you up for success. On the flipside, if you wait, it only makes financial progress more difficult. Here are five ways you can start planning for next year today.
The key to planning out your finances for next year is to start now. It can be easy to rationalize putting off planning until after the holidays. You may have events to attend or special family gatherings taking place making it seem like you have no time. Giving in to that rationale may hurt you in the long run.
“If you want to save more money in 2018, then you have to make a plan before January 1,” says Jason Parker, RICP®, President of Parker Financial. Be careful to customize your planning. You want it to fit your needs and goals.
Look back over what happened this year and how you want to improve as you look forward to next year. “By starting to look at the New Year now, you can be proactive with your finances instead of reactive,” adds Parker pointing out the importance of starting now so you can be prepared for what is in store for you in 2018.
Analyze Your Life Insurance Needs
Life insurance may seem like the last thing you need to consider at the end of the year. There’s a simple reason to keep it in mind. Every year you wait to get the life insurance coverage you need, you risk paying more in premiums when you do get coverage, as premiums generally increase with age.
Many people don’t have life insurance coverage because they think it’s too expensive. In fact, over 40 percent of Americans don’t have coverage even though they realize they need it. If you don’t have coverage, or don’t think you have enough, it’s often not as expensive as you might think. Often, it ends up costing less than a dollar a day.
Whether you’re single, carrying debt, or have children attending college, you likely need life insurance. By taking a look at your current coverage, you can see how your family will be provided for if you were to have an untimely death.
Take Advantage of Tax Savings
The end of the year means one thing – it’s time to start thinking about taxes. Tax time will be here before we know it and in many cases, you only have until December 31 to take advantage of tax savings that will help you in 2018.
“People commonly think about charitable giving as a way to help with their taxes, which is great, but there are other ways to help your tax bill,” says Parker. Charitable giving is good, but that only scratches the surface for tax savings. Parker lists other opportunities, such as:
• Flexible Spending Accounts (FSA)
• Retirement account conversions (Traditional to Roth)
• Making January mortgage payments in December
There are many other tax saving opportunities available, from Health Savings Account and 529 account contributions and more. If you have questions, make sure to consult a tax professional to find what’s best for your situation.
Set a Money Date Night
Being on the same page financially with your spouse or partner is key to effective money management. Aligning financially begins with healthy communication with each other about money.
It may seem like life is too busy with the holidays, but consider it a gift to your family. “Just like you set aside time at the end of the year to bake holiday cookies or spend time with family, you need to set aside time to go through your finances as the year comes to a close,” says Parker.
You may be overwhelmed in the beginning, and that’s fine. Set a regular meeting time, either once a week, once a month or some other frequency and discuss your money. Consider it a date night to discuss your goals, needs, and desires for your family’s money.
Avoid the Holiday Debt Hangover
With the holidays comes one thing – shopping for gifts. Buying gifts can be a fun experience and is a joy to give loved ones something they will cherish. As you consider your shopping list commit not to overspend.
Instead, set a budget for how much you plan to spend on each other. Ultimately, it’s the thought that counts. No gift is worth debt, so make sure to check your emotions as you shop to ensure you won’t have a nasty credit card bill come January.
The end of the year can be a fun and hectic time. If you follow a few of these tips, it can also be a great time to set yourself up for success for next year and beyond.