In the midst of all the fun that comes at the end of every year, it’s easy to get carried away with spending and throw caution to the wind when it comes to your finances. But doing so can mean starting the New Year on a bad note. Instead, use these tips to maximize your tax contributions, avoid overspending, and achieve your financial goals.
1. Don’t Go Overboard on Holiday Spending
It’s so easy to get carried away with holiday spending, leaving you with a “financial hangover” in January. Another motivator to not get carried away? Keep your spring goals in mind and how a negatively impacted credit score could affect them. For example, if you are planning a major purchase like a house or a new car, your credit score will be under intense scrutiny by creditors and you don’t want excessive holiday spending to affect this. Consider devising a holiday budget – including gifts, travel, decorations, and food – and stick to it. Avoid making large purchases on credit cards unless you can pay off the balance in full. This way, you can start January fresh and focused on your goals, rather than scrambling to pay off credit card debt.
2. Donate to Charity
‘Tis the season of giving, after all. Even if you can’t afford to make a sizeable contribution, a small donation can still make a difference and will leave you with that warm and fuzzy feeling. An added bonus? Charitable donations lower your taxable income, meaning you’ll pay slightly less income tax.
3. Contribute to Your Retirement
With the year almost over, now is the time to maximize your contributions. The more you contribute to your pre-tax retirement plan before the end of the year, the less taxes you’ll pay in April. If you are under the age of 50, the maximum contribution for 401(k)s, 403(b)s, and 457 plans in 2016 is $18,000.
However, if you are over 50, you can contribute a maximum of $24,000. The maximum yearly contribution limit for IRAs if you are under the age of 50 is $5,500, and $6,500 if over the age of 50.
4. Put Thought Into Your 2017 New Year’s Resolutions
So often, people make their resolutions on a whim and put little thought into how to actually achieve them, leading them to be abandoned before February even hits. Use the approaching new year as an opportunity to reassess your financial goals. What have you achieved this year? Which goals need to be focused on or reevaluated? What new goals can you add? Consider making long- and short-term goals to help you stay motivated throughout the year and remember to make them realistic and measurable.
Keep these tips in mind and you’ll be sure to end 2016 on a high note and ready to conquer 2017.
It isn't always easy to stay on top of your finances, especially when you have developed unhealthy spending habits over the years. However, as you begin to realize the many benefits of having healthy finances, it can become something you want to make a conscious effort to improve. When your finances are in a good place, you often have access to better opportunities whether it be a mortgage loan, greater credit line or business loan. On that note, here is how you can become an expert at managing your finances in case you need a few tips.
Learn to Use Technology
The good thing about managing finances in the technological age is that you don't have to do it alone. There are so many apps available that will help you pay bills on time and track your expenses. For instance, some apps force you to live within your actual income and tell you what to do when you need to balance your budget.
If you need an app that will help you get better at saving, then some will set aside your spare change for you. Also, don't be afraid to use more simple tools such as your smartphone calendar to set reminders about payments if you don't automate them.
Seek Legal Advice
Sometimes, being an expert at something means understanding that you can't possibly know it all. This is why you have professionals around you that can help fill in the gaps where you're lacking. Consider hiring a legal firm to help with any challenges that are beyond you. Lexington Law is a good firm as they could help remove negative items from your credit report. Read this Lexington Law Review (Our #1 Credit Repair Service of 2019) to find out more about how they could help improve your finances.
You can't do better than what you know when it comes to managing finances. You should, therefore, invest your time in learning more about finances and how to manage them. Think about what your goals for your finances are and what knowledge gaps you need to fill.
For example, if you want to invest in the stock market so that you can improve your net worth, then you may need to learn more about investing to do so successfully. To boost your knowledge, try reading articles on credible blogs that share finance information from professionals. Also, be weary of content from finance-driven companies as it could be biased.
Work on Growing Your Income
As a self-proclaimed finance guru, you know that the more sources of income that you have, the better. Work on increasing your streams of income so that you have more money to meet your targets whether it's to save for a property or put larger sums towards retirement. One way to do so would be by getting extra income by doing social media marketing for businesses or creating tutorials on YouTube. If you own a property, renting out rooms is a great way to make passive income.
Live Within Your Means
It can be difficult to live within your means when you live in a society that is always presenting you with things to buy. However, being more conscious about the things that you purchase could help you realize that most are wants rather than needs. To live within your means, always take time to think about a purchase as opposed to impulse spending. You should always get good at bargain hunting as many times you can find items of similar quality at a cheaper price.
Learn How to Manage Debt
Debt doesn't have to be a bad thing if you understand how it works and how to manage it. It can be a tool for credit building when you understand the fundamentals. For instance, if you take out a loan or credit card, always be mindful of your interest rates.
By paying the amount of money you borrowed back in full before the due date, you won't have to pay interest on what you borrowed. If you can't pay back in full, paying more than the minimum payment will ensure you incur less interest. For the most part, the secret to good debt management is never spending more than you can afford to pay back.
Managing finances is a life skill that can help improve your quality of life. By following the mentioned tips and taking your finances more seriously, you're more likely to master the art of healthy finances.