Can you believe 2017 is almost gone? In a few days we will be shouting “Happy New Year!” welcoming 2018. As our yearly routine, many of us will start planning New Year’s resolutions, like getting back in shape by joining a gym; taking care of our health by buying into the latest detoxification trend; adding new items to our bucket list; traveling more and so on.
One important resolution often overlooked by many is the resolution to be more financially responsible and to take charge of our financial health. Somehow, the thought of financial fitness is a topic many people avoid in part because we tend to think in terms of the “here and now” and planning for the future seems, well, so far away. The good thing is, you don’t have to wait until the new year to think about ways to improve your financial health. Here are some strategies you can implement right now, before the year ends.
1. Review your retirement plan (401K, 403b, 457) or other retirement savings such as a traditional IRA.[i] If possible, max-out your contributions, especially if your employer is matching your contributions.
2. Make contributions to NYS 529 College Savings Plan. You can contribute up to a maximum of $13,000 in annual contributions. All contributions are tax deferred and withdrawals are tax-free when used for qualified education expenses.
3. Increase your charitable contributions to decrease taxes and increase refunds. You may want to consider making a charitable contribution or donation to the LDC. The LDC is a 501(c) 3 tax-exempt, not-for-profit organization and can give you a tax deduction letter for the amount you donate.
4. Make an additional payment to your student loan. The interest is tax-deductible.
5. Make additional payments to your mortgage. This will get you double benefits. The portion of the payment that is interest is tax-deductible. The difference will pay down the principal to pay off your mortgage faster.
6. Make energy improvements to your home. The cost of energy saving devices such as solar panels is deductible.
7. Trade in your clunker for an electric car. You will receive a tax deduction and save on gasoline too.
8. Consider deferring end-of-year income such as bonuses to 2018 to minimize 2017 taxable income. This will help if you expect a decrease in your 2018 income or you plan to make a larger contribution to your 401K or retirement account.
[i] You have until April 15, 2018 to contribute to your traditional IRA for tax year 2017. The maximum annual contribution for 2017 is $5,500 for individuals under 50 years old and $6,500 for persons 50 years or older.
Denise Garrett is a financial counselor at the LDCENY and has more than 25 years experience in financial counseling and retail banking.