Editor's note: This article originally ran on Get Rich Slowly. It has been reprinted here with permission.
The new year is just around the corner. How was your 2014? Did you get everything you wanted to accomplish done? Are you getting ready to set new resolutions? Before you do that, spend a little time to finish 2014 with a bang. Here are some money moves you can make in 2014, whatever is left of it, to make full use of the current year and get set up to start the new year off on the right foot.
- Maximize your retirement contributions: If you have not contributed the maximum to your retirement accounts, now is the time to tighten your financial belt and contribute as much as possible. The 401k, 403b and 457 plans have a $17,500 limit if you are under 50 and a $22,500 limit if you are over 50. IRAs have a limit of $5,500 if you are under the age of 50 and a $6,500 limit if you are over 50. If you are self-employed, you will also need to open your individual 401k by Dec. 31. You will have until April 15 of next year to contribute, but the account has to be set up by the end of this year. If you are a stay-at-home parent, you can open a spousal IRA and contribute the maximum allowed based on your spouse’s income.
- Rebalance your portfolio: Now is a good time to check on your investment portfolio and see if you need to rebalance it. Over the course of the year, due to the changes in the market, the portfolio allocation might not be what you want based on your risk tolerance.
- Start your tax return and decide what moves you can make to minimize your taxes: It is always beneficial to start the tax return (based on your current paystub you can figure out the end of the year number roughly). This will help you decide which tax moves (No. 4 through 7 below) to make before the end of the year.
- Make your charitable contributions: From a pure financial point of view, will it be beneficial to make most of your donations in the year 2014 or push them to 2015? We take the standard deduction one year and itemize deductions in the next; so for us, pushing the donations to the itemized deduction year will make the most sense for our taxes. If you want to reduce your tax liability in 2014, you have to make your donations by Dec. 31. Also, if you have any stock that has appreciated well over the years and you want to sell that without paying a big capital gains tax bill, consider donating the appreciated stock. You don’t have to pay the tax and you can deduct the entire appreciated amount.
- Defer income (and taxes): Similar to the point above, if you are freelancer, you might be able to defer your income if you are trying to reduce your tax liability for this year. If you cannot defer income, can you defer (or advance) paying your other deductible taxes like property taxes?
- Take your minimum required distribution: If you are over 70½ years of age, you have to take the required minimum distribution (RMD) from your 401k or IRA before the end of the year — otherwise, you will get a penalty bill from Uncle Sam. If you reached age 70½ this 2014, you have until April 1, 2015, to take 2014′s RMD.
- Harvest tax losses: If you have a big capital gains bill, you might be able to reduce your tax liability by getting rid of some of your holdings that are trading well below what you paid for them (if you think they won’t recover).
- Declutter your house: With all the entertaining you will be doing, you might already be on a decluttering spree. But it provides more advantages than a clean house. Set the stuff you don’t want aside and drop it off at a Goodwill or similar organization to get a tax break by claiming the donations.
- Open a college savings plan: With college costs rising every year, any savings is better than none. Open a college savings plan and contribute as much as you can. As a bonus, you can share the college savings plan information with the grandparents so they can contribute to it as well. As of 2014, 34 states and the District of Columbia offer state tax deductions for contributions to a qualified 529 plan.
- Review the benefits you get via your employer: It is probably open enrollment season for many employers. Now is a good time to check out your HR website to see all of the discounts and savings you are eligible for (other than the major health insurance and retirement benefits). For example, if you are eligible for free gym access, that is something you can eliminate from your budget. Make a list of all the discounts that you can use and put it next to your computer so it’s easy to check throughout the year.
- Review your health insurance plan and your 2014 health spending: Open enrollment season is also the best time to review this year’s health spending. How much did you have to pay out of pocket? Is there a plan that will better suit your needs? What are the limits of your current plan? Have you taken advantage of those limits and fulfilled all of your medical needs? For example, you might be eligible for an extra pair of glasses before the year ends. Based on the review and your new plan, also see if you are eligible for a Flexible Spending Account. Figure out how much money you can set aside every month for your next year’s needs. If you are hoping to get insurance via the Healthcare.gov open marketplace, the open enrollment started on November 15.
- Use up your Flexible Spending Account: Use it or lose it. If you have any money left over in your FSA, depending on the plan, you might have to use it before the end the year. Check you plan’s deadline and make a plan to use up all the money.
- Do a self appraisal (career and personal): Even if you don’t have to do an appraisal at work, I recommend doing it anyway. It serves three purposes: First, when it is time to ask for a promotion or raise, you will have a list of accomplishments ready; then, when it is time to look for a new job, it will be easy to update your resume by just collecting all the previous year’s appraisals. Another thing to consider is whether you are happy with what you accomplished this year at work and make plans to improve next year. As far as a personal appraisal is concerned, evaluate whether you accomplished all the personal goals you set for yourself. If you didn’t, can you identify why?
- Change your passwords: While this may not be considered a traditional money move, you may want to do this nonetheless, given all the hacking of bank accounts and credit cards in the news. It is a good idea to change all your passwords regularly anyway, and the end of the year is a good time to do it.
Suba Iyer blogs about personal finance at WealthInformatics.com. Her budgeting philosophy? Cut down on unfulfilling expenditures so that you can spend money on what you want, and always pay yourself first.