Fall is a favorite season for many people, myself included. The changing colors, carving pumpkins with scary faces and kids in costumes, shouting of trick or treat, make it a fun time of year. It is also a great time to review your financial foundation and make any necessary changes.
The upcoming weeks generally get pretty hectic for most families, so let’s make a few smart money moves before all the Fall and Holiday festivities completely take over your life.
Open enrollment frequently happens in the Fall. Often times we automatically reenroll in the plans we participated in the past year. However, before you do that this year, I suggest you spend a few minutes reviewing how well you took advantage of the Company benefits offered to you. Are you under-or-over-using your healthcare and dental plans? You may also want to compare the price of your medical plan against what your state now offers too.
If you have a flexible spending account, it’s a good time to review it and plan to use any remaining funds by the year-end. Also, think ahead and plan for any extra expenses you anticipate for the next year (i.e. child getting braces, a new baby etc.) and consider whether you need to increase or decrease the amount you set aside. And may I suggest, if you find you are overfunding your flexible spending account that you redirect the extra money to your 401k or some other savings vehicles, such as a 529 plan for your child’s college education, rather than putting the money back into your paycheck.
Now is the perfect time to review your latest 401k statement and see if you need to make any changes. While I don’t believe you should make knee-jerk reactions to the market, you still need to do your due diligence. Examine your investments and see if any have been consistently underperforming. Do a little research and decide whether this is just a normal bump in the road or if it’s time to select another investment.
From a big picture perspective—are you still on track to retire on your target date? You may need to increase your retirement savings, whether it’s through increasing your 401k contributions or adding other investments. This is also an excellent time to review your beneficiary forms and make any needed changes as well.
Christmas will be here before you know it, so now is the time to crunch some numbers and see what you can afford to spend this holiday season. A lot of people skip this step and put everything on their credit card, which means starting the New Year with new debt. Figure out your plans for the holidays, including travel, food and gifts now to avoid regret in January.
In conjunction with your holiday budget, you need to create a list of everyone you plan to give a gift to this Christmas. Remember, gift-giving is optional. I know there is pressure to buy everyone a present, but it is a choice. Put a dollar amount beside each individual on your list and don’t permit yourself to exceed the amount. A few extra dollars here and there may not seem like a big deal, but it adds up quickly. More importantly, once you start spending more than you planned, it’s easy to discard your budget and just spend freely. Also keep in mind that while kids really enjoy receiving presents, your friends may prefer skipping the gift exchange this year and just getting together for a meal or coffee after the holidays.
I know there is so much going on right now, but if you can take a few minutes to plan for 2014, it will make it so much nicer when the clock strikes midnight on New Year’s Eve. So let’s start with the fun stuff, plan your vacation(s) for the next year. Not only will be you able to ensure the time off from work, you can also start saving your money for your trip(s) and have something fun to look forward to as well. Plus, you’ll have a better answer than “We can’t afford it” when your kids ask you for things. Now to the less fun part—taxes. Yes, April 15 is months away, but double check to make sure there aren’t any moves you can do before the end of the year to lower the amount of taxes you owe, such as charitable donations, funding a traditional IRA, selling poor-performing investments, etc.
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