New Year’s Day 2019 is just around the corner. Most people are preparing for the holiday season right now; they’re buying gifts, decorating home and hearth, or getting ready for parties and travel. However, in addition to enjoying the holidays, the end of the year is a great time to put your finances in order. Doing so can help you end the old year well and put your best foot forward as 2019 unfolds. Here are five great financial moves you should make before year’s end.
1. Maximize Your Retirement Account Contributions
The end of the year is a great time to get your retirement savings in order. If you don’t have a retirement account of some sort, such as a 401(k) or IRA, ensure you open one prior to the year’s end. Then, try to put as much money as your budget can support into the account, up to the maximum contribution. Maximizing your contributions will help ensure you optimize the growth and earning potential of your retirement account, which will help prepare you financially for retirement. Additionally, since most retirement accounts are tax deferred, maximizing your contributions can provide considerable federal tax benefits when you file your income taxes next year.
2. Optimize Your 529 Savings Accounts
Retirement accounts aren’t the only type of tax-deferred plans you’ll want to focus on to close out the year. If you have a college-bound child, then you should also think about contributing money to a 529 college savings plan. 529’s are tax-advantaged savings accounts designed specifically to help you set aside funds for a college education. States offer these plans, and they tend to vary a bit, so check with a trusted financial advisor when opening one. Starting one of these accounts and maximizing your contributions prior to year’s end is a great way to position yourself financially for 2019. It’s also important to understand that any qualified expenses you paid in a particular year must be reimbursed that same year. As an example of this, if you were to write a check for next spring’s tuition in December, you must then ask for reimbursement from your 529 savings plan before year’s end.
3. Prep for Tax Season
Don’t wait until the last minute next April to do all your tax preparation. Instead, start getting ready for tax season right now. Call now and schedule a meeting with your accountant or tax advisor to discuss your expenses, income, and tax liabilities. In many cases, your tax advisor can clue you in to work that you need to do to prepare for filing personal income taxes or your company’s tax returns. If you get this advice before the end of the year, you’ll have a few months to act on it prior to having to file your returns. Additionally, conducting your tax preparation now will give you an opportunity to find all your necessary paperwork, or to reach out to businesses and government agencies to replace any important documents you’ve misplaced or never received in the first place.
4. Make Some Charitable Donations
The end of the year is also a great time to support good causes with charitable donations. Many charitable organizations accept donations in the form of clothing, blankets, and household goods; these charities are especially appreciative of clothing donations during the winter, since this is when the supported at-risk populations are at their most vulnerable. Additionally, you should also consider supporting charities whose causes you believe in with cash donations. Supporting great charities at the end of the year is the right thing to do; additionally, in many cases, your household goods and financial donations may be tax deductible when it comes time to file your taxes.
5. Review Your Financial Planning Assumptions
The end of the year is a great time to review the assumptions you use to underpin your financial well-being. At year’s end, you should assess your budget; determine how well you adhered to it and whether following your budget is helping you attain your short- and long-term financial objectives. Doing this at year’s end will afford you time to make any necessary adjustments to ensure you remain on track financially throughout 2019. Additionally, you should take some time at year’s end to review all your insurance policies. Ensure you have the appropriate level of insurance to cover your assets. If you’ve made changes, such as bought or sold cars, homes, or added on to your business, make sure you have the appropriate level of insurance coverage to protect what’s important to you.
Work Hard at the End of the Year to Make 2019 Great!
Are you ready to close 2018 out with a bang? Year’s end is the perfect time to make some shrewd financial moves and put yourself in the best possible position for a great 2019. So, consider the advice here, and put the effort in now to set yourself up for a great and prosperous New Year!