Another year seems to have flown by, and as you gear up to conquer 2016 be sure to take a minute to make these five financial moves before the new year.
- Grade 2015
Wes Moss calls this a “30-minute family report card,” and the idea is to sit down with your family and determine how you all did financially for the year. Just like in a school or work review, this gives you a chance to see where you did well financially, as well as where you can improve in the upcoming year. Did you reach all the financial goals you set for 2015? Did you stay in budget? Where did you overspend? Did you pay off any debt?
If you had a particularly rough 2015, you might want to consider enacting an Economic Shutdown to get 2016 started on the right foot. This 30-day financial cleanse can help you stop spending and save more, and hopefully reset your financial outlook. If you’re just generally looking for some ways to trim the fat on your spending, though, then read our ebook with 17 money hacks. These actionable steps may help you with reaching your financial resolutions sooner in the year. By understanding how your 2015 looked financially, you’re setting yourself up to perform better in 2016.
- Sell your money-losing positions and/or investments for a tax loss
At Wela, we believe in investing for the long term, and part of that is being sure you have a balanced portfolio. If you are holding money-losing positions and/or investments in your portfolio, you should consider selling them for a tax loss. Just be sure to understand the rules and reasoning behind this move before taking action. There are very specific wash sale rules, such as you are not allowed to buy substantially identical stock or securities within 30 days. We suggest you work with your financial advisor and visit the SEC’s website for specific rules on this topic.
Related: Timing The Market Is A Suckers Game
- Review your retirement strategy
When Wes collected data on happy and unhappy retirees for his latest book, You Can Retire Sooner Than You Think, he found that the happiest retirees spent at least five hours per year planning for their retirement. Whether retirement is a long way down the road or if you’re already counting down the days until you start, you should take time every year to be sure that your retirement strategy is on track.
- Max out your 401(k) contributions
This is your last chance to take advantage of your company’s 401(k) matching program for 2015. If your company offers this program, we suggest you at least contribute enough money to your 401(k) to receive this benefit. Say "please" and "thank you" to this free money your employer is offering. Even if your company does not offer 401(k) matching, you should consider adding to or maxing out your 401(k) contributions in order to lower your taxable income.
- Use the money in your Flexible Spending Account (FSA)
A flexible spending account is a special tax-free account in which you can contribute money that will pay for services that your healthcare plan doesn’t cover. Generally, you forfeit money that is not spent at year-end from these accounts, so it’s best to be sure that you’ve used it or moved it. Deadlines can differ on these accounts, so check with your benefits office to learn the details behind when this money needs to be used and the rules on moving it. For additional information on services covered by your FSA please visit www.healthcare.gov.
Get started today with checking these items off your year-end to-do list, and start your new year on the right foot!