Where did 2013 go? More importantly, where did your personal finances go this year? It’s hard to say for sure until you actually look. Now is the time to evaluate and possibly recalibrate things like your budget, savings and retirement account.
Why now, and not at the very end of the year? For many people, the next six weeks – and especially the last two – are the busiest of the year, and the most expensive! Some financial matters, like anything involving tax benefits or consequences, may require action right now.
Before the holiday chaos and costs begin, give yourself an hour to get organized and another hour to assess your situation. Here are some important checkpoints:
Is the budget balanced? Assuming you have a budget, how does it look? Take note of how many months you were over or under and what the causes were. If you don’t have a budget, compare today’s checking, savings, credit and mortgage balances to last November’s. Are you better or worse off? Adjust your holiday spending accordingly. http://www.careonecredit.com/knowledge/10painlesswaystobalanceyourbudget.aspx
Spend or save? If you have a health savings account (HSA) or flexible spending account (FSA), check your balance now. The FSA is “use it or lose it;” if you have money in the account, find something to spend it on (childcare while school is out, a new pair of glasses, etc.). Money left in an HSA can be rolled over to next year. But if there’s a substantial amount in either account, consider setting aside less next year.
Check charitable giving. How many friends and neighbors have requested a $20 donation for the (fill in the blank) 5k or walk team? How much have you given a charity through a payroll deduction, or in the donation plate at church? Compare the total to last year’s tax return. If it’s lower and you’d like to give more back, consider doing so before year’s end or you might be looking at a higher tax bill.
Investigate investment performance. If you have a 401(k), IRA or other retirement account(s), how has it performed? The average 401(k) balance has nearly doubled since 2008. http://blogs.marketwatch.com/encore/2013/10/18/
average-401k-has-nearly-doubled-since-2008/. If your portfolio is lagging, it might be time to make some changes. Tap into your financial planning resources for expert advice.
Confirm fair and balanced. Unless you’ve applied for a loan in the past year, or checked your credit report out of curiosity, you probably don’t know where you stand. Contrary to the commercials, you don’t need to check it constantly. But once a year is a good idea, just to make sure there aren’t many errors that could cost you. Comprehensive, annual and free credit reports can be found at Annual Credit Report.com https://www.annualcreditreport.com/index.action – no strings attached.
I could add to this list with things like insurance policies, investment contribution limits, gifting taxes, and so on. But for all of us, at the end of the day, it boils down to taking stock of our financial picture as we near the end of the year. With this knowledge in hand, we can spend, save and give more wisely during the remainder of this year, and develop a smarter plan for 2014.
Kat's Money Corner is posted on Dollars & Sense every Tuesday. Kat Hnatyshyn, when not blogging or caring for her little one, is a manager with CommunityAmerica Credit Union. For more financial chatter, click http://twitter.com/savinmavens.