What's your Holiday?
It’s the end of the year and most people are busy with the holidays. Finishing up with Christmas, Chanukah, Kwanzaa, or what-have-you, or preparing for new year’s eve. But there is something else you should be thinking about. This year’s taxes. (I covered my ears in anticipation of the groans.) Now is the time to make those last minute donations and deposits to minimize the amount you are paying to the government.
Mind you, most of the tax deduction sort-of-things do not have to be taken care of in the next week, some can go into the new year, January and beyond. Check with your accountant or go on-line and research what needs to be done now and what can be put off for later. I know most people end up being a little short on cash due to the outlay of funds for holiday stuff, but reducing your gross income through deposits to accounts now can save you a bunch later.
If you don’t have an IRA now is the time to open one. Any banking institution and most of the on-line stock market firms will be happy to help you open an account. A traditional IRA will give you tax savings now; A Roth IRA will give you tax savings later. Either one will benefit you when you are ready to retire.
As always, if you have a matching funds feature in a 401K at your work, contributing the max that will be matched gives you an immediate 100% return on your money, and that will also help with your retirement funds.
The end of the year is also a good time to ‘balance the books’ and see how you are doing in the gains/loss/net worth battle. See how you are doing in the race to retirement and whether you have gained or lost since last year. If you’ve never done this before, you are establishing your base line for next year’s comparison.
If your net worth has increased, give yourself a pat on the back, if not, try to figure out where you may have stumbled and how you can avoid the same barriers in the coming year. Either way, analyzing your position can help you determine how you can improve next year’s performance.
I hope everyone had a great year and a happy holiday season, and Cheers to a fantastic New Year!
