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By Taylor Schulte, CFP, Founder and CEO
| November 7, 2017
In a few months, you’ll likely be inundated with posts, articles and videos about how you can make 2018 the best year yet. But why wait until after Jan. 1 to get your money in order for the new year?
Being proactive and taking the right steps now can help set you up for more success in 2018. With that in mind, I reached out to my peers and colleagues to collect their best tips so that you could make all the right money moves today.
Here’s what they advise doing for your financial well-being before 2018 rolls around.
“The end of the year presents a great opportunity to reassess your investment portfolio to ensure your asset allocation hasn’t drifted too far away from where it should be, which could potentially increase the level of risk in your portfolio.
“If various asset classes or securities have drifted significantly, there is likely an opportunity to harvest tax losses to offset any potential gains. Be careful not to trigger a wash sale, which occurs when you buy the same security within 30 days.”
— Matt Cosgriff, Financial Adviser at BerganKDV
“If you’re over 70½ years old, make sure you withdraw at least the required minimum distribution (or RMD) from any tax-deferred retirement accounts, like 401(k)s or IRAs. The tax penalty for missing the Dec. 31 deadline is a dizzying 50%!”
— Amy Hubble, Principal Adviser at Radix Financial
“Calculate how much you can increase your savings before the end of 2017 and get the most out of your retirement plans.
“Take a look at your most recent investment statements. How much more could you save during the last few months of 2017? The annual contribution limit for traditional and Roth IRAs is $5,500, with an additional $1,000 catch-up contribution allowed for those 50 and older.
“For those saving through an employer-sponsored retirement plan like a 401(k), the annual contribution limit for 2017 is $18,000 (plus a $6,000 catch-up if you’re 50 or older).”
— Benjamin Brandt, CFP® and President of Capital City Wealth Management
“Pay estimated quarterly taxes before year’s end. For 1099 employees and business owners, paying quarterly estimated taxes in December (vs. paying them in January) allows individuals and families who itemize their taxes to get an extra deduction if they pay before the end of the year.”
— Eric Roberge, CFP® and founder of Beyond Your Hammock
“Make sure you book all your medical appointments before the end of the year, before your deductible resets in January (as many, but not all, do). This will also give you a chance to spend any Flexible Spending Account (FSA) money you haven't used yet.”
— Pamela Capalad, Founder & Financial Planner at Brunch & Budget
“Thinking about next year’s goals is always an exciting process. But before you get so caught up in the future, know that the end of the year is a crucial time to assess if you're paying way too much on your monthly expenses.
“Reviewing your insurance policies (life, auto, homeowner's), household bills and other expenses can often reveal areas where you can save big in the coming year.”
— Jeff Rose, CFP® of Alliance Wealth Management LLC
“Reduce your taxes on investment gains. While you shouldn’t undercut your investment plan or goals to reduce taxes, tax-loss harvesting is when you offset the taxable capital gains that you’ve had throughout the year on your investments by selling investments that have lost value.
“The realized capital losses help to reduce the taxes owed on the gains. This has to be done by Dec. 31.”
— Mary Beth Storjohann, CEO & Founder of Workable Wealth
“It doesn't matter if you’re a thousandaire or a millionaire: Everyone needs a budget. If you’re not sure where your money is going, the solution is the b-word. Budget! Commit the last few months of the year on figuring out the best budget or cash-flow program for you and your family so you can start 2018 on the right financial track. The best budgeting tool I've found is YNAB.com.”
— Rianka R. Dorsainvil, CFP®, Founder and President of Your Greatest Contribution LLC
These experts raise important points and critical money moves to make that can help you grow wealth — and stay wealthy.
But we don't just earn, save and invest our money. Most of us want to help others, and that leads us to mindfully give some of our wealth to causes that matter to us, too.
The end of the year is a great time to consider making charitable contributions to reduce your tax obligation and give back to society. Charitable giving is also a great educational tool and a fun way to get the whole family involved.
Here’s how: Ask your children to research organizations on a site like Charity Navigator and propose a charity to donate to this year.
Not only are you helping to develop good money habits in your kids from an early age, but you're including them in important conversations that can bring your family closer together.
To see the original version of this article, click HERE.
Taylor Schulte, CFP®, is founder and CEO of Define Financial, a fee-only wealth management firm in San Diego. In addition, Schulte is the founder of StayWealthySanDiego.com, where he is dedicated to helping consumers maximize their wealth. He has been recognized as a top 40 Advisor under 40 by "Investment News" and a 2017 "Young Advisor to Watch" by "Financial Advisor Magazine."