The year is nearing its end which makes it a good time to take a look at your finances and make sure everything is in order. Nothing eases the conscience quite like a well balanced budget and squared away finances. Below are some strategies that will reduce your expenditures and boost your savings. Here’s how you can end the year on a financial high note:
Take a Step Back
Look at all your expenses throughout the year and see how the picture looks. Take notice of your total income versus what you needed to pay for throughout the year and see if you’re on track to attaining your financial goals. Notice patterns and see if you are setting yourself on the track to increase assets, or simply treading water. Use this analysis to plan financially in the new year.
If you find that you’ve spent too much, you may want to think about incorporating automation into your business model. Many companies are seeing tremendous results from utilizing AP Automation software. This type of software helps mitigate the strain that comes along with keeping track of expenses throughout the year. It limits the amount of man-hours typically required to do the task. As a bonus, it also cuts down on the likelihood of expensive mistakes.
Adjust Retirement Funding if Needed
Retirement planning is a great way to bargain with your future self, if you are persistent with your approach. Funding this account is one of the best uses of your money that exists, so try to max out your contributions, or get as close as you logistically can. If you are under 50 years old, maximum contribution is around $18,000 per year, while those over 50 can add several thousand more.
Invest in Your Health
Medical bills that exceed 10% of your adjusted gross income are deductible by the IRS. This is always subject to increase, so staying on top of it does yourself a favor for the future. If you are a senior citizen, it’s especially important that you get these expenses taken care of before the start of the new year.
Another way to invest for your long-term health is by adopting healthier choices for your lifestyle. Make it a priority to regularly exercise throughout the week, an activity which has proven benefits in a clinical setting time and time again. In addition, there will never be a better time to hit the brake on bad health habits. We now know that refined sugar is closely linked to a person’s risk for cancer, so the less you have, the better. The food industry knows that sugar makes something more palatable, and it will thus increase sales, but if you value your own health more than the profits of big food companies, then the choice is obvious. Forgo the desert and you’ll increase your odds of being around for years to come.
Consult Your CPA Before Busy Season
The end of the year is often a busy time for accountants, but it’s still better than scheduling an appointment in the weeks leading up to mid-April. This is an important step in orienting your finances that ought to be taken care of sooner rather than later.
You can get a great tax benefit for contributing to your preferred charity by the end of the year. A good move is to donate investment gains instead of gifting cash. This will grant you the charitable tax deduction while also avoiding capital gains on property that’s donated.
Look into a 529
A 529 is a college savings plan with tax advantages. If higher education is on the agenda for you or someone you know, this might be a good thing to consider.
You also want to make sure education expenses from the current year are secured before the year ends. For example, a check written out for tuition within that calendar year can only be reimbursed if filed before that year’s end.
Spend Your Annual Raise Wisely
If you are fortunate enough to have gotten a raise, be smart with how you spend it. For example, make sure you are contributing to your 401(k) proportionately to the raise. Otherwise, you can use the money to trim your outstanding debts down rather than splurging on a new car or something else that will only deliver short-term satisfaction.
You could also look into spending the money on something that you will get long-lasting use out of, or that will streamline your work. Many people are using things such as business management software or inventory software to great benefit, and saving themselves a great deal of aggravation and stress.
Examine Your Portfolio
Selling assets that are at a loss to offset gains will help mitigate the overall burden from taxes. In addition, look at projections for any stocks or funds and see if it still makes sense to hold onto them. Having a little bit of foresight with the stock market helps give you the edge in a game which becomes a gamble when you aren’t educated.
Plan for the New Year
You’re business may have had a successful year, but there is always room for improvement. Making changes and redirecting your goals is appropriate and necessary for any success of a business. With a little time and planning, your business will be heading into the New Year ready to take on anything.