Five Money Moves to Make Before the End of the Year
January feels like a clean slate, and each year presents another chance to set and achieve new goals. While you're thinking about next year's financial objectives, don't forget to make some important money moves by December 31 that can help you save and invest more wisely in the new year.
Take advantage of your health insurance before your deductible resets.
If your health insurance plan is tied to the calendar year (as most are), you may be close to meeting (or have already met) your deductible and possibly even your out-of-pocket maximum. This means your insurance should now cover the cost of most or all of your qualified health care expenses. If there are any procedures or other care you'll need in the near future, it may make sense to schedule appointments before the end of the year. Make sure to check the rules of your specific health care plan.
Consider the status of your contributions to a 401(k) and any other qualified retirement accounts.
Maximizing your employer-sponsored 401(k) contributions each year will go a long way toward fully funding your retirement. This is an opportunity to make pre-tax contributions and investments that will grow tax-free until you start withdrawing money during retirement. You should also consider whether you're eligible to fund a Roth IRA. Although contributions to a Roth IRA account are made independent of your employer with after-tax dollars, those funds grow tax-free forever — meaning you should be able to withdraw contributions and earnings from your Roth IRA account during retirement without paying any federal income tax. If you're not eligible for a Roth IRA, ask your company if it offers a Roth 401(k) option, which will also allow you to salt away some extra dollars. And if your company doesn't offer any type of employer-sponsored retirement savings plan, be sure to think about opening and funding a regular IRA.
Use your paid time off (PTO).
If your PTO resets every calendar year, make sure you take all of the time allotted to you to relax and get paid for it. This year has brought so many unexpected challenges, and you deserve to recharge before diving into 2021. Because PTO is part of your overall compensation, talk with your employer about how much time you have banked. Then be sure to submit your PTO requests as early as possible to make sure you get the dates you want.
Check your credit reports and credit scores.
You already know it's a good idea to regularly check your credit reports and credit scores, but be sure to do it one last time before the end of the year. Checking your credit scores is one of the best ways to get a sense of your overall financial health, and it's wise to go into the new year feeling confident about how you're allocating your credit. Plus, checking your credit reports regularly can help you spot mistakes and signs of potential fraud or identity theft.
Review the security of your financial accounts.
It's easier (and therefore tempting) to use the same passwords for your various online accounts, whether it's email, banking applications or your favorite online retailers. However, the longer you use the same passwords for multiple accounts, the more vulnerable they are to identity theft. Make a plan to review and change your passwords regularly in order to keep your personal accounts secure. For an extra layer of protection, consider opting into two-factor authentication (when available) and using a password management app.
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