Forget New Year’s resolutions. The real time to wrangle with your personal finances is the fall—when you can still maximize your 2016 financial situation and also avoid the holiday debt that most of us drag into the next year. “We get so wrapped up in our families and travel and last-minute work stuff this time of year,” says Farnoosh Torabi, personal finance expert and author of You're So Money. “But it’s really important to take a pause and think about what your year-end goals are.” Not quite sure what you should be tackling before 2016 comes to a close? Consider this your cheat sheet:
1. STUFF YOUR RETIREMENT ACCOUNTS.
Socking away more money in an IRA or 401(k) is a win-win: You’ll have dramatically more dough in your golden years than if you delay saving until later, and you’ll be able to lower your tax bill come April. “The more you contribute, the more you can deduct from your taxable income,” explains Torabi. “It’s really worth it to see if you have any room in your budget to increase your contributions over the next few months.”
Health insurance might have an open enrollment period, but retirement savings doesn’t work that way—you can head down to HR for help on how to bump things up at any time. (The upper limit for 401(k) contributions is $18,000 for 2016 and, if you’re under age 50, up to $5500 in a traditional IRA.)
Not quite sold on the power of compound interest, or why retirement savings should edge out some of your holiday shopping? Let’s assume you’re 25 years old and make $40,000 a year. If you can put an extra $400 yearly in your 401(k) account starting this year, you could have an extra $3870 in annual income when you’re ready to retire, according to Fidelity.com.
2. GET YOUR EYES CHECKED.
Health insurance deductibles have surged 67 percent over the past five years, according to a report by the Kaiser Family Foundation. And workers now pay an average of $1318 out of pocket before health coverage begins to cover part of their bills, up from $584 a decade ago. That means healthcare is probably eating up more and more of your monthly budget. But if you’ve already reached your deductible for 2016, you’ll pay dramatically less for any healthcare you get between now and the new year. So start making appointments! “If you need an eye exam or a flu shot or there’s a procedure you’ve been putting off, why not schedule it for the fall and take advantage of the fact that you’ve already covered your deductible,” says Torabi.
3. SPEND EVERY LAST CENT OF YOUR FSA.
If you set aside funds in a Flexible Savings Account (FSA), that money is “use it or lose it"—and you don’t want to kiss even one dollar good-bye. Torabi recommends checking the balance now, to avoid a frantic December 31 CVS run for stuff you might not actually use. Qualified expenses range from acupuncture to antacids, childbirth classes to copays, according to benefits provider WageWorks. Just make sure you’re mindful of which expenses require you to show a prescription (such as some OTC medications) so you’re not denied down the road.
4. MAKE A HOLIDAY BUDGET.
Even if you’ve been diligently rocking your cash flow each month, the holidays can mean a major loop. Last year, the average American spent $830 on Christmas presents—and for nearly one-third of celebrants, that figure topped $1000, according to a Gallup poll. Add in holiday travel, parties, and decorations, and celebrating the season can get seriously pricey. Finding that extra scratch is hard to do without some advance planning—which might explain why credit card debt tends to rise in the last few months of the year.
Rather than trying to hold back in the moment, Torabi suggests mapping out a strategy well before Jingle Bells takes over the radio. “Maybe instead of everyone in the extended family buying a bunch of gifts, you suggest picking a name out of a hat for a gift exchange and setting the limit at $50,” she says. Or you start buying gifts earlier this year, so you have more time to bargain hunt on sites like Groupon and Giftcardgranny.com. Or, if you’re loathe to trim any line items from your holiday budget, you balance out all of that extra spending by earning more income. “If you have time on the weekends or evenings, a small side gig for a couple of months can really help,” she says. Seasonal workers are in high demand this time of year, or you can jump into the gig economy by checking out Uber or Taskrabbit.