Time-sensitive tips for making the most of your money now and in the new year.
As December 31st fast approaches, fourth-quarter financial moves can really pay off for 2020. J.R. Morrison, managing partner at BK Partners, says there are a number of things people can do now to save money in the coming year.
Maximize your retirement account
Most financial professionals agree maxing out your retirement contributions is a smart move.
“We all know planning for retirement is crucial,” says Morrison. “401(k) contributions are made with pre-tax income, so you’ll pay less in federal and state taxes. And while Roth IRA contributions don’t impact taxable income, they’re still a smart investment for retirement planning.”
Take advantage of health care coverage
“You’ve probably met your deductible by now. It could be a good time to receive routine care or even qualified elective procedures, rather than waiting until January when your deductible resets,” Morrison says. “And you might want to do some research if your plan is up for renewal. Networks change, prices fluctuate. A change could save you money.”
Check your credit
The holiday season is prime time for consumer fraud, so in addition to reviewing credit card statements monthly – something you should do year-round, Morrison notes – consider reviewing your credit score. Several websites offer free credit reports so you can ensure data is accurate and your credit’s in good standing.
Max out your health savings account (HSA)
“HSAs allow you to set aside pre-tax funds for qualifying medical expenses, but there are limits to how much you can contribute and carry over to the next year,” Morrison says.
If you still have funds in your account that exceed your carry-over limit, consider purchasing medications or medical equipment or supplies (think: blood pressure monitors, hearing aids, eyeglasses) or other permissible items. Check with your plan first to ensure purchases are compliant.
Consider charitable giving
“Since the 2017 tax reform, there has been lots of discussion about the impact on charitable giving. However, studies show people are still donating to their favorite causes because they want to, not just for a tax break,” says Morrison.
In fact, according to the Tax Policy Center, 64 percent of households paid less in income taxes under the new tax laws than they did previously. Morrison says there are several ways you can support causes you believe in while setting your own finances in order.
“For instance, Qualified Charitable Distributions allow donors over age 70 ½ to gift up to $100,000 from their IRAs so the money isn’t counted as taxable income,” he explains. He adds that automatic monthly donations are another great vehicle for helping nonprofits better manage budgets and maintaining control of your philanthropic giving throughout the year.
Regardless of how you give, Morrison stresses the importance of keeping detailed records and seeking professional advice.
“Always get dated receipts for your donations,” he notes. “And consult an expert for financial advice from charitable giving to estate planning and tax preparation.”
Here’s to saving in 2020!