With holiday shopping and festive menu planning, it is easy to lose track of things that are less exciting – like taxes and money management. Knowing that, I have compiled a short checklist of 5 things that, if done now, can save you considerable money before the year is over. The best part is they are quick to do, so you will be back to celebrating in no time!
- Get yourself organized. As year-end statements and tax forms begin to show up in the mail, file them into a tax binder or folder. You might keep that folder next to where you usually sort mail to make this easy. Having your documents in one place can go a long way towards managing the cost of tax preparation.
- Make an additional contribution to your retirement plan. If you have a traditional (non-Roth) retirement plan or a traditional IRA and are under 70½, you can save money on taxes by making a qualified contribution. The contribution will decrease your taxable income, and you get the benefit of boosting your nest egg! I know that holiday budgets can be tight, but the benefits of investing in your peace of mind will last longer than your Christmas tree.
- Look into tax loss harvesting. If you can use a reduction in your taxable income this year, consider selling some underperforming stocks before December 31. Capital losses in excess of your gains of up to $3,000 can be used to offset your taxable income, and any excess can be rolled forward to 2017.
- Keep track of your holiday budget. With the excitement of the season, it is easy to lose sight of your spending. Remember that the best predictor of your retirement success is your ability to save. Use a formal budget to manage how much you spend on gifts, holiday parties, shopping for the holiday table and eating out. A holiday does not have to break the bank to be memorable.
- Criminals don’t take a Christmas break! Identity theft is a threat year-round, but especially so during the holidays. Now is a good time to request your free credit report. I recommend using www.AnnualCreditReport.com – it’s one of the few outlets that is truly free (no credit card required). Be sure to monitor the activity on your credit cards and bank statements a little more closely. Don’t let crooks go holiday-shopping on your dime!
Finally, remember that the best way to avoid wasting money and time is to make sure you have the right strategy in place for your retirement. Don’t leave your security and peace of mind to chance!
We are here to help through the holidays and into 2017!