With Dec. 31 still nearly two months away, you may not be quite ready to get into the holiday spirit, let alone start making year-end financial decisions. But the fact of the matter is that many people decide to improve their finances too late in the year and wind up falling short on their goals. Rather than succumb to that trap, now's the time to start working on your end-of-year financial checklist. Here are a few items you may want to tackle.
1. Boost your retirement savings
The more you contribute to your 401(k) or IRA this year, the bigger a tax break you'll get. So if you're nowhere close to hitting the limit on whichever account you have, now's the time to work on ramping up your savings.
For the current year, you can put up to $18,000 into a 401(k) and $5,500 into an IRA if you're under 50. Workers 50 and older get a catch-up opportunity that raises these limits to $24,000 and $6,500, respectively. If you're 45 and want to max out your 401(k) for the year, but have so far contributed just $1,200 a month, you'll need to really work on making some budget changes to get you closer to that goal. Not only that, but it often takes a pay cycle or two to change 401(k) allocations, so if you want to up your contributions, you'd be wise to put in a request with your employer immediately.
2. Create a holiday budget -- and stick to it
Many people jump into the holidays blindly without realizing the impact that can have on their finances. That's why it's crucial to map out a holiday budget in advance, rather than shop on a whim. If you create that budget and see that your total obligatory spending, so to speak, comes in higher than expected, you'll still have a couple of months to save for that impending expense. You'll also have an opportunity to generate more cash by working a side hustle so that you're not forced into debt come mid-to-late December.
3. Get life insurance
Let's face it: You're not getting any younger, and the older you are when you apply for life insurance, the costlier your premiums are likely to be. If you have others who depend on you financially, or who would find themselves at a financial disadvantage in the event of your passing, and you've yet to purchase life insurance, now's the time to get moving.
Is November the best month to apply for life insurance? Not necessarily, but here's why you should act sooner rather than later. For one thing, once the holidays kick into full gear, you're apt to get busy, at which point you might forget about life insurance and end up putting it off further. Additionally, many of us put on extra pounds during the holidays (even when we pledge not to), and if you're on the cusp of being overweight, that could cause your premiums to go up if you first apply after the fact. You're better off signing up now -- while you're less distracted and potentially in slightly better shape.
4. Earn that raise
December is often the time when managers sit down to evaluate their employees and determine who will be getting a raise going into the new year. And while that decision should be based on your performance dating all the way back to January, it stands to reason that if you go out of your way to do a better job this month, it'll stick out in your boss' mind when he or she sits down to do your review. So volunteer to lead the next big project or do something significant that catches your manager's attention. You're apt to have more time to work longer hours now than during the holidays themselves, so take the opportunity to impress your boss and clinch that pay increase.
There's no reason to wait until December to start thinking about your year-end financial goals. Rather, make that list now and start working to achieve them. With any luck, you'll be in a much better place once the new year rolls around.
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