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A lot of time and energy is focused on the holidays at the end of the year. But it’s important to set aside some time for your finances as this is the last chance to make adjustments for 2013. As you get ready to ring in the New Year, here are a few financial matters to think about as you get ready to close 2013 and prepare for 2014.
When my wife and I decided to buy a home this year, I decided to check our credit report before meeting with a bank to discuss our mortgage options. I discovered that some of my father’s (not so favorable) credit and loan accounts were appearing on my report.
I called the reporting agency and the lenders reporting the error and worked with them to correct the reporting issue. Thankfully, we were able to get everything cleared up before we were pre-approved for the loan. Of course, had I checked my report earlier, I could have fixed the problem without the added pressure of getting a loan and buying a home hanging over my head.
You never know what might appear on your credit report; that’s why it’s important to regularly check it for errors. If you haven’t done so in 2013, I recommend reviewing your credit report before the end of the year and correcting any issues that arise as soon as possible. Should you need to take out a loan in 2014, you can do so knowing that your credit history is correct.
I graduated from college in 2006 and started saving for retirement in 2011. That’s five years of lost retirement savings and interest that could have made a huge difference. Thankfully, I was still relatively young when I realized that I needed to save for retirement.
Are you saving for retirement? If you aren’t, I can’t stress how important it is that you start as soon as possible. If you don’t have an IRA, a 401(k), or some other retirement investment vehicle, I suggest taking some time before the end of the year to research your options and open a retirement account so that you can start saving and investing in 2014.
If you already have a retirement account, have you maxed out your contributions? At this point, it may not be feasible to do so before the end of the year, but do contribute as much as possible — especially if your employer matches your contributions.
There’s still time to lower your 2013 taxes. The easiest way is to make a charitable donation. You can make a year-end monetary gift to a church or other charity, or donate clothes and other items to places like Goodwill or the Salvation Army.
Do you have any pre-tax savings deductions on your paycheck? If you contribute money to a 401(k) or a Health Savings Account using pre-tax dollars for example, you can increase your final deduction for the year to lower your taxable income.
(Similarly, you can contribute to your Traditional IRA to lower your taxable income for this year. You have more time to do this, though: you are allowed to make 2013 IRA contributions until April 15th, 2014.)
Lastly, if you want to claim a loss on stocks that have performed poorly, remember that you have to sell the stock to report a capital loss on your taxes. If you decide that you no longer want a poor-performing stock, selling it can be a good way to recoup some of your losses in the form of a tax deduction.
In 2012, my wife and I had our first baby. This year, we bought a condo. My financial needs and expenses changed drastically each year from 2011 to 2013 (and they will definitely change again in 2014). I needed to adjust my budget accordingly each year.
How will your 2014 be different than 2013? Consider pay raises, changes in medical costs, new or expired taxes and tax deductions, new financial goals, and the desire to increase or need to decrease savings and charitable giving.
Also think about what events or milestones may happen in 2014. Do you have a child who will start driving? If so, you’re auto insurance rates are going to go up and you may also need to set aside more money for gas. Will you have to travel for a wedding or family reunion? Include an estimate for those costs, too.
Are there any things you need to do OR are doing before the end of the year?