The year has flown by and before you know it you will be making a whole fresh batch of New Year's resolutions. But what about this year's resolutions to save more, invest wisely and plan for your financial future?
There is still time to take these five money saving steps before the clock runs out!
1. Dump those sluggish stocks.
Nothing is more depressing than checking your investments only to see the same old underperforming stocks dragging your whole portfolio down. It is true that mastering the art of picking good stocks can take time and feel intimidating. However, it doesn't take a pro to identify which stocks aren't pulling their weight. Dump them and move on - you can use the loss to offset this year's tax burden.
2. Add a Roth IRA to your retirement portfolio.
The days when Roth IRA income caps applied are now gone. This means investing in a Roth IRA is now open to more people.
Since you pay taxes up front on contributions to a Roth, your money is then free to grow tax-free in a protected account. Best of all, when you take your retirement distribution, that is tax free as well.
3. Use your FSA funds before you lose them at year-end.
Flexible Savings Accounts, or FSAs, are great for two reasons: they give you a tax break and they maximize the value of the money you set aside for spending on healthcare.
However, if you don't spend every cent before year-end, you will lose access to those funds when the year rolls over.
If you don't think you will be able to use all of your saved FSA funds before the end of the year, talk with your employer and find out if you can roll over any of the cash. If not, find out what you can spend them on and go for it!
4. Contribute the maximum to your HSA account.
Unlike the flexible savings account, the health savings account (HSA) funds you have accumulated can be rolled over.
Here, your aim should be to contribute as much as you are permitted to so you can offset your income when tax time rolls around.
Because there are no income caps for HSA contributions, and the funds are fully
5. Take those required minimum distributions on time and in full.
This is one of the easiest tax saving steps to forget about, but the penalty is a steep 50 percent if you forget.
Many people who inherit an IRA do not realize they also must take a required minimum distribution (RMD) or face the same 50 percent penalty on the amount of the required distribution.
If you have an IRA and you are at least age 70 and one-half, talk with your financial planner to find out what your required minimum distribution is. Make arrangements to withdraw that amount before year-end.
This is not legal or financial advice. Please consult a legal or financial advisor for your specific situation.