What a year it’s been! Okay, it’s not over yet, but with all of this talk about the holidays, it sure seems like the end of the year is hurtling towards us at a crazy pace. Before we know it, we’ll be talking about New Year’s resolutions. Yikes!
Before the end of the year really is here, there are a few things you should consider doing. These things will leave you ready to face the new year and to enjoy what’s left of this one.
Verify that you’ve paid enough into the IRS for income taxes. Now, I’m not a proponent of paying a lot of extra money into the IRS; that’s like loaning them your money without getting any interest. But, unless you’re expecting your tax return this year to be drastically different than last year’s return, you should have paid in at least as much as you owed last year. You can quickly check this by looking at the YTD amounts on your W-2 and comparing them to the total tax amount on your tax return. You still have time to make changes to your withholding if you need to.
Make plans to contribute to your retirement fund. If you’ve been doing it all along through your employer-sponsored 401(k) plan, that’s great. If you don’t have access to that kind of luxury, though, you’ll want to put some thought into opening a traditional IRA or Roth IRA for yourself. Although you don’t have to make these contributions before the end of the year to take advantage of the tax benefits (you have until April 15th), it’s not a bad idea to start thinking about it now.
Make sure you’ve used all of your cafeteria plan funds. Again, you may have some extra time to use these funds after the year is over (check with your employer for those details), but you should at least be making a plan to use all of the money in your cafeteria plan. Hunt down receipts for items you haven’t sent in yet such as over-the-counter medication, contact lens supplies, and child care invoices. If you don’t use this money before the end of the year (or your grace period) you will forfeit your claim to it. Leaving your money for someone else to use is always a bad idea.
Take a moment to reflect on the past year. Now is the time to decide what things worked for you and what things didn’t. Did you take a stab at the envelope method, but then realize that using nothing but cash didn’t work for you? What went wrong? Maybe you can try a modified version of it next year. How did you do with your savings goals? Did you save enough to replace your refrigerator like you planned? What things should you planning to save for next year? Congratulate yourself on the things that went well and look for ways to salvage the attempts that didn’t go as smoothly. Either way, you probably learned a lesson or two about your finances.
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