It’s almost time to pop the bubbly and ring in the new year. It’s also a time to check in on your finances and take some simple steps that will help set you up for financial success in the New Year. Here are some crucial money moves to make before saying goodbye to the past year.
1. Up your retirement contributions.
Now is the time to max out your retirement account. If you haven’t allocated enough to your 401(k) to receive the full employer match, change your contribution amount before you get your last paycheck of the year. For 2015, those under age 50 can contribute up to the maximum of $18,000, which is an increase of $500 over last year. If you have an IRA, make sure you’ve contributed as much as you can — up to the annual maximum, which is $5,500.
2. Make donations.
This is a great time of year to donate items you no longer need or send money to charities you love. A great resource is Charity Navigator, which is a comprehensive guide to the nation’s most worthy charities. Donating is an important way to give back, but it can also benefit you in the form of a tax deduction. Monetary or in-kind gifts made before the end of the year can be claimed on your taxes. The IRS has put together a valuable list of tips for deducting charitable contributions.
3. Get your taxes ready.
Ease into the upcoming tax season by organizing your finances before the start of the new year. There are a number of free tax preparation tools that can help you get organized. If you invest a little bit of time now, you’ll have a better idea of what you might receive or owe on your taxes in 2016, as well as insight into last-minute steps you can take to reduce what you owe. Early filers have a head start when it comes to getting tax refunds too.
4. Drain your FSA.
Use it or lose it. If you started a flexible spending account for medical reasons, don’t let the funds expire. Remember, you are in jeopardy of forfeiting that money if you don’t expend it by December 31. For a comprehensive list of medical expenses eligible for reimbursement, visit WageWorks.
5. Review financial statements.
Look for unauthorized transactions: It’s important to stay on top of your accounts throughout the year to promptly catch any erroneous or fraudulent transactions. The best way to do this is by setting up real-time transaction notifications so that you’re always in the know about activity on your account. If your account does not offer real-time notifications, make a habit of regularly reviewing account statements so that you can report any unauthorized transactions right away. It’s also a good practice to do a final year-end review.
Revisit your subscriptions: Audit your bank statements from the past year for recurring expenditures. Forgot that you signed up for a 30-day trial for a music streaming service or an app with monthly fees? Subscription services can add up, and if you’re no longer using them, it’s probably time to cancel and save yourself the money.
Assess your bank account fees: Is your bank costing you money? Do you know how much? In addition to monthly minimums, overdraft, and ATM fees, some banks have fees you may not be aware of because they’re hidden in the fine print. Calculate how much you’ve been charged in fees in 2015 and consider making the switch to a no fee bank account in the New Year.
6. Get your free credit report.
You are entitled to one free credit report every 12 months from the three nationwide credit reporting agencies. Order online at AnnualCreditReport.com, the only authorized website for free credit reports. Be advised that the summary does not include a score but rather provides a thorough history of your credit including how much you have and what you owe. Use your reports to check for any suspicious activity or accounts you don’t recognize. These might be signs of identity theft and can be addressed by immediately contacting your creditors.