2019 Update: We still think this is an interesting discussion of year-end financial housekeeping — but you may also want to check out our more recent discussion on end of year financial steps.
What sort of year-end financial housekeeping do you do? What should you do?
I have fond memories of a trip home for Christmas one year, perhaps a year or two after I’d started working as a lawyer. I always used to sleep late and my parents would each poke their heads in to check on me and try to rouse me. Anyway, one morning around December 27th or 28th my father burst into the room at some ungodly hour (or so I thought then) to remind me that I needed to review my stocks and sell off some losers so I could have capital losses to offset against capital gains. Uh: thanks, Dad. (Pictured: Magic wallet in fresh strawberry, available at J.Crew for $22.50.)
He was right, though — as the year draws to a close now is a great time to think about a number of different aspects of your finances. For example:
- Use the money you put into your flexible savings accounts — think eyeglasses, over the counter medicines, and more.
- Max your contributions to retirement accounts if you can.
- If you’re saving to go back to school, or saving for your child’s education: consider maxing your contributions to your 529 plan (if you can) if your state has a deduction for contributions.
- Get your free credit reports if you haven’t already gotten them for the year. (And according to that article you can also get a free credit score, which is news to me — I’ll have to check it out after holiday shopping, as the article advises.)
- Give to qualified non-profit charities (and lower your taxable income).
- Assess your stocks and other holdings. As my father noted, if you’ve had capital gains, selling loser stocks and funds can be a great way to offset those gains.
Readers, what sort of things do you do for your finances at the end of the year? What sort of regular housekeeping do you do for your finances in general?