Fidelity Investments just sent around their "Three Smart Year-End Money Moves for Women to Get Financially Fit in 2016," but I think these apply to men as well. Let's look at their tips and then I will discuss where I'm at on these tips and what tasks I need to complete.
Year-End Money Tips from Fidelity Investments:
- Just start thinking about it. Understanding how you are saving and spending can be a valuable step to helping put your financial house in order. You don’t necessarily need to manage every penny. Consider our guidelines:
- Not more than 50% of your take-home pay should go to essential expenses, 15% of your pretax income to retirement savings, and 5% of your take-home pay to short-term savings.
- Use this savings and spending check-up from Fidelity Investments to see where you stand.
- Feeling charitable? Charitable donations are an effective way to reduce your taxable income when you itemize on your tax returns.
- If you’ve been meaning to make a donation and want to lower your tax bill for 2015, be sure to make your contributions by December 31.
- Now is also a good time to clean out a closet or basement and donate clothing and household goods. Remember to get receipts for non-cash donations.
- Kids in the family? Consider gifting and asking others to give to their 529 college savings plan to help save up for future education costs.
- Be good to yourself, too. Decide on a few simple financial actions you can take before 2016 and check these off your list to get a kick-start on a financially heathier New Year. For example:
- Use the money in your flexible spending account.
- Check the beneficiaries on financial accounts and make sure you have designated a beneficiary for each account.
My Year End Checkup
The first thing I did was check out Fidelity's savings and spending checkup. It was easy to pull together the numbers thanks to my budgeting in YNAB. And I knew it was going to be bad. I just didn't know how bad. I used my November expenses in the calculator.
What I learned - My monthly essential expenses are too high. I knew this. My mortgage is at a great rate, but I spend too much on groceries and other essentials around the house. My car payment is what put me over the top, but I'm working to pay that off sooner rather than later. I could pay less, but my goal is to pay off my car as quickly as possible.
My retirement savings is okay, but I could be doing better.
I'm definitely not putting aside enough money each month for short-term savings. In fact, as of late, I've been digging into it more often than I would like. I need to start building that back up again.
As to charitable donations, I'm doing great! I've donated quite a bit this year, both in cash and in physical donations to Goodwill (thank you, Konmari Method). I'm interested to see how that affects my taxes next year.
I don't currently have an FSA, so I'm okay there. I should look into one again for 2016. Even just a few hundred dollars to cover expected copays and prescriptions would help. It's definitely not top priority right now though.
I absolutely need to check out my beneficiaries for my various accounts. I know that my retirement accounts have the money split between my siblings, but I'm not sure about my savings or investment accounts. It's one of those things no one wants to think about. I'm in my 30's. I don't want to think about my mortality. But if something does happen to me, I want to make sure that the people I love get the money they're due as easily as possible. My big advice here is that if your situation has changed recently (marriage, divorce, kids, etc), check out your beneficiaries list and make sure that your money goes where you want it to go.
My next steps are to continue to tighten up my budget. I need to get a better handle on my spending and cut out the unnecessary expenses. Once I do that, I can increase my short term savings and maybe consider contributing more to my retirement accounts. Seems simple, right? Now I just have to do it.