Year-End Finance Tips

Published by Kerry Meath-Sinkin

With 2018 approaching, I wanted to send a few finance tips to think about before the end of the year. I will be sending along a more robust list of financial “to-do” in the New Year, but I wanted to send along a few pieces that are important to review (if you haven’t already done so) before the year ends. Some of these might not be appropriate for you, so feel free to skim, and only incorporate what makes sense. As always, please talk with your financial team to review your personal situation in more detail.

1. Max out your 401(k) or get as close as possible – According to Schwab, only 15% of people max out their 401(k)s. If you haven’t, I can’t encourage you enough to take advantage your 401(K), at least up to your company match if you can.
2. Spend down your FSA – Don’t forget to spend down the bulk of your account before the end of the year. If you don’t use it by the end of the year, most plan sponsors have the option to carry forward up to $500 of unused funds. If you have any questions check with your plan sponsor to see if this option is available to you.
3. Tax Loss Harvesting – Maybe not this year because of the strong bull market, but generally in a diversified portfolio not every investment is a winner. If you do have underperforming investments in a non-qualified account, selling them at a loss could make sense for two reasons. First, it may free up cash to invest elsewhere. Second, it can give you a tax break. Whenever you sell investments at a loss, you can offset gains of a similar amount. For example, if you take a $4,000 loss for the year, but also have  a $4,000 gain in a non-taxable account, the two will cancel each other out, which means you won’t pay taxes on your gains. You can also apply up to $3,000 in losses to offset your income for the year, thus lowering your taxes that way. With the potential tax changes, it makes even more sense to harvest losses against ordinary income in 2017.
4. Year-End Charitable Giving – For those who still want to make charitable contributions, this is a great time to do it. Just remember, a tax deduction only saves a fraction of what you donate, so it is best to make this because you really want to support a cause, not for the potential tax write-off.
5. Consider a 529 plan – When it comes to savings, a 529 plan can be a very financially prudent move because of the tax free growth. While not tax deductible, this can be a great place to invest extra savings.
6. Review your Insurance Policies – Make sure you and your loved ones are protected if something happens to you. Now is a good time to review any major life changes across the year, such as the birth of a child, or something that would require you to change the coverage you have.
7. Pay down your credit card debt – Sometimes it can be tough around the holidays to keep credit card balances paid off. Remember that credit cards can charge as much as 18% on your outstanding balances, so do your best to pay those off!

If you want to learn more about how the potential tax reform may influence your planning, please check out another blog from our attorney Ben Goethel here. Good luck wrapping up 2017 with a bang!

Kerry Meath-Sinkin is a registered investment advisor and financial planner based in Minneapolis. She is an honors Brown Graduate, and works with clients not only in the Twin Cities, but nationwide. Kerry believes in a holistic approach to finance.  She works with her clients to develop a practical plan with their finances, while also working on their inner relationship with money. Together, these aspects allow clients to feel healthy, abundant, and free. Kerry also has a passion for healthy living, is a certified Ayurvedic practitioner, and public health educator. Click here to learn more about Kerry.