Year end financial tips.

October 10, 2014

erin_doan_agency 031514Good Neighbor Tips from Erin Doan, State Farm Insurance, Scottville.  

Before the holiday rush steals your attention, make sure to check off these year-end personal finance tasks:

Contribute extra money to your 401(k). Adding additional pre-tax money to your retirement savings may help lower your annual taxable income. The maximum amount individuals under 50 can contribute in 2014 is $17,500, or $23,500 if you are 50 or older. Since you can’t add money to the account yourself, talk to your employer’s payroll department to increase your deferral amount. Don’t forget to change it back for your first paycheck next year.

Review spending habits. Use the past year’s expenses to help you build a financial plan for the upcoming year. You may need to adjust categories that were consistently over-budget, and you may want to re-evaluate any unused or seldom-used subscription services — such as cable packages, magazine subscriptions and gym memberships. Cancelling could save you money.

Pay down debts. Resist the temptation to use your year-end bonus to splurge for the holidays. If you have credit cards or loans to pay off, use the extra money for bigger, one-time payments. Not only will the amount owed decrease, but the total interest will decrease, too, making it easier to pay off the debt faster.

Spend healthcare dollars. If your insurance plan includes a flexible spending account (FSA), you may have some money left over as the year comes to a close. If you have more than $500, avoid the use-it-or-lose-it rule. Make the most of your benefits by completing all preventative exams and taking care of other medical needs before year’s end. Most appointments are difficult to schedule on short notice, so plan ahead.

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