I recently watched The Suze Orman Show* where she shared her top 10 money moves to make before the end of the year. I’ve recapped her listing, added some personal commentary, resourceful links, and then I share an additional five to sweeten the deal. It’s time to master this playbook!
- Max Out Your IRA. While the IRS allows 2014 contributions until April 15, 2015, Suze suggests maxing out your IRA now. Doing so now (versus waiting) will generate more retirement savings in the long-term (e.g., time value of money). Since IRA contributions are limited by your filing status and income, click here to visit the IRS website to determine how much you can contribute before year-end.
- Look at Your Investment Returns. If you have any losses in non-retirement accounts (e.g., a regular brokerage account), now would be a good time to sell them. Non-retirement investments are simply the same types of investments that you find in retirement plans (e.g., 401K plan), i.e., stocks, bonds, mutual funds, etc. When you sell an investment at a loss, you must report your capital losses. Be clear on how this may favorably or unfavorably impact your tax return.
- Check Mutual Fund Ratio Expenses. All mutual funds charge their shareholders an expense ratio to cover annual operating expenses. The ratio is disclosed in the fund’s prospectus and shareholder reports. If you are being charged more than 1%, Suze’s recommendation is to get out of your fund and get your money working for you more effectively.
- Getting (A) Tax Refund? Adjust Exemptions. To change your exemptions, complete IRS Form W-4 so that your employer will withhold the correct federal income tax from your paycheck. In lieu of granting the government an interest-free loan, take action today so you don’t have money withheld next year.
- Freeze Your Credit Reports. This recommendation protects you against ID theft, especially during the holidays. When you place a freeze on your credit report, no one can apply for new credit in your name. This is also a great option if you need a little help practicing self-control during all the holiday credit promotions! The cost ranges from $3-$10 per person per bureau to freeze a credit report; a couple of states have higher fees. See specific info for your state with the links to each credit bureau (Equifax, Experian and TransUnion) on our Resource page.
- Enroll in a Health Care Plan. Hopefully by now you have enrolled in a qualified healthcare plan or Healthcare Savings Account (HSA) offered by your employer. For those searching for healthcare plans independently, visit www.Healthcare.gov
- Update Beneficiaries. Confirm you money will go to the right people. Suze reminds parents not to list minors as a beneficiary. It sounds like a great idea; however, as a minor (and without established guardianship) the courts will place the funds in an account that will only allow your child access once he/she turns 18 years old.
- Get A Will & Trust. Plan ahead for the unexpected. Do it today.
- Look at Your Money. Do you really know how much your lifestyle costs you? Suze instructs her viewers to add up all their expenses for the year (make an estimate for November & December) and divide by 12 months. Take this realistic view, be honest with yourself and make adjustments to your 2015 Budget. Refer to our Resource page for simple budget templates.
- Make a Donation. Select a non-profit and give to a worthy cause or charity. Be generous and start the New Year with money flowing in and out!
- Replenish Your Emergency Fund. Has 2014 taken a toll on your emergency fund? If you do not have 3 to 6 months worth of expenses in liquid investments, use this time to replenish your emergency fund. Stash your year-end bonus, cash gifts, and any additional income you receive the remainder of this year to prepare for the unexpected.
- Contribute to your 401(k) Plan. Many employers match an employee’s 401(k) contributions up to a certain percent of salary. Find out what that percentage is within your organization and start there. If you contribute less than your employer match, you are leaving free money on the table. If you are already contributing, consider stretching yourself to reach the 401(k) limit ($17,500 in 2014). If a 401(K) is not an option for you, consider an IRA or 403(b).
- Control Your Spending. The last two months of the year can be an exciting time, filled with so many impulse purchases! Instead of starting 2015 with a financial hangover, let’s practice self-control, focus on your financial goals, and end the year fiscally fit.
- Establish Your 2015 Financial Goals. This is a MUST before 2015 begins. Assess where you may have been led astray in 2014 and set a goal to change the behavior in the New Year. Then, THINK BIG and set 1 or 2 stretch goals that will challenge you and keep you on a trajectory of building wealth.
- Seek Help. Was this year plagued with unexpected circumstances and/or a series of poor financial decisions? If you find yourself deep in debt or overwhelmed by your finances, take control and seek help from trustworthy organizations. Visit the National Foundation for Credit Counseling (www.NFCC.org) to locate reputable agencies in your area.
*The Suze Orman Show. “ Pre-2015 Money Moves” on CNBC. Original Air Date 11/01/2014.
We want to hear from you. What action will you take from this list? Was there one recommendation you liked most? If so, comment below, like this post, and share my blog with family and friends for a more prosperous 2015!