5 Good Financial Habits Every Individual Needs to Incorporate Right Now

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What financial steps do you plan to take in the next few months? 

Besides making a planner and finishing other holiday activities another thing to do is to focus on Good financial habits. It’s time to set yourself up for success in 2018. So, this is the perfect time for a financial check-up. All you need to do is create a new tradition and set aside some time to evaluate your finances. You don’t need a crystal ball to see what situation you are going to be in. You know your income and expenses to this point, so you’re able to see what you should do before December 31.

Here are six must make financial moves that will build a good foundation for the months to come before year end to save you money and lower your tax bill:

  1. Review the current year’s expenses for medical and/or dependent care

Even if your next year won’t play out exactly like this one, taking this step will go a long way by making sure that you choose the right allocations for your flexible spending accounts for health and dependent care. You don’t want to overestimate and leave money on the table, or contribute too little and not take advantage of the tax benefits. So, don’t forget to check deadlines for using the money in your health care and dependent care.

click here to know some time management hacks for better and successful lifestyle.

  1. Take stock of your career

Did you meet the professional goals you had for this year? Figure out what you want and think some smart goals for the next year. If one of your goals is to make more money then be prepared to ask for a raise. If you’ve already achieved your target for funding an emergency savings account, for example, then you can shift the excess savings into a more aggressively invested account to maximize returns.  If you have an ongoing dialogue with your boss and you have done your research and feel that asking for a raise is appropriate, then ask away, no matter what date is on the calendar. Further, if you have a choice between receiving income in 2017 or 2018, you should opt for 2018 to defer the income taxes associated with that income.

  1. Charitable Contributions

Charitable contributions can lower your tax bill. If your holdings are appreciating, give back through charitable donations as part of the rebalancing process. You can include the donation on next spring’s tax return. Make a cash, check, or other monetary gift contribution to your favorite exempt organization. There is some important advice for reducing tax while making it including these rules:

  • Give money to a qualified charity
  • Get a receipt or other statement for your donation
  • Items must be in “at least good used condition” to count

Remember that the following are not tax-deductible:

  • Unfulfilled monetary pledges to charities
  • Certain donations for which you received something in return
  • Contributions to political candidates
  1. Decide what to do with your bonus

No matter when you get a bonus, whether you get a little or a large sum of money at once, it’s a good time to review and analyze your financial goals to determine the best use of it. Financial success is 80% preparation and 20% implementation. Plan out how you’ll use the bonus in order to avoid spending it frivolously. Take these financial steps while deciding:

  • Making sure your emergency fund has enough for at least three months of monthly expenses
  • Paying off high-interest debt
  • Putting money toward an upcoming expense
  1. Rebalance Your Investment

Rebalancing means taking those assets that are above your target percentage and selling what you have too much of to buy what you have too little of. Professional money managers usually do this quarterly for clients, but once or twice per year will do the trick, too. Take the time to review your current mix of your accounts and shift money around to rebalance. Rebalancing requires attention at consistent intervals based on tax considerations so set a rebalancing timeline, you can also choose an auto-rebalancing for ease.

Last But not the Least: Take a look at spending

Reviewing is an important trick of financial management. You need to know where your money has gone so far which will help you to plan for the next year. Check for any leftover balances in your flexible spending account, as well as their usage deadlines. Review realized and unrealized gains and losses and see if gains can be offset but selling some losses. Don’t forget to review your estate documents, look over your wills, trusts and beneficiary designations, and make any necessary changes. Figure out if you need better systems in place, like a separate savings account for travel and vacations, or putting business expenses on a separate credit card.

 

 

 

 

 

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