It’s December 23! How are you feeling? Maybe a little stressed if your 2013 financial goals are unmet. Running short on money for holiday gifts; no idea where your retirement contribution will come from; and that college education account may go unfunded. It doesn’t have to be this way!
Our suggestion: Start January 1st to accomplish your 2014 goals. Don’t procrastinate when it comes to your finances. Instead, use all twelve months to gather the resources you need to meet year-end objectives.
Sounds nice, you say, but how do you squeeze out those extra dollars from your monthly budget? That’s not always easy. To give you a start, we have also included below a few cost cutting ideas for you to consider.
Saving Strategy for 2014
Here are four of the most common “high priority” financial goals. If you utilize the entire year to save monthly for these objectives, you can avoid year-end financial stress as well as save on next year’s taxes. It doesn’t get much better!
- IRA Contributions. You don’t need to wait until tax time to come up with $5,500 ($6,500 for individuals over age 50) to maximize your IRA contribution. Instead, start saving in January. Choose to automatically transfer $458.33 per month from your checking account into your Traditional or Roth IRA.
- Saving for College. Want a 20% return on your investment? Begin contributing $416.66 per month into your child/grandchild’s 529 college savings plan. As a resident of Indiana, you receive a tax credit equal to 20% of your 529 contribution, up to a maximum credit of $1,000. If $416.66 per month is too steep, anything less will still get you a 20% credit. Since multiple family members, on different tax returns, can each receive up to $1,000 in tax credit, this is a great gift idea for 2014!
- Charitable Gifts. Open up a Charitable Gift Fund. For example, Schwab allows you to open up a charitable gift account, make monthly tax-deductible contributions, and invest the money throughout the year. Best part: You can receive a tax-deduction on your contributions, while not being required to immediately distribute money to charities. In other words, you can allow your money to be invested and grow over multiple years before gifting to charities, while still receiving a tax-deduction in the contribution year.
- Holiday Shopping Budget. In January, revisit your credit card bills and retail store receipts. Calculate how much you spent on each family member and friend over the holidays. Divide the total amount by twelve. Contribute this amount monthly into a separate savings account. It’s that easy.
Find Ways to Reduce Expenses
Now is a great time to create a list of all your expenditures in 2013. If you have been using Quicken or some other tracking tool, you are in great shape. If not, start with your checking account and credit card bills and pull together a comprehensive list. Then, look for ways to decrease those monthly bills. Here are just a few places to start.
- Reassess Homeowner’s Insurance Coverage. Do you know the deductible on your homeowner’s insurance policy? By increasing your deductible, you can potentially save 100s of dollars per year in premiums. Your cash emergency fund of three to six months worth of living expenses will grant you this flexibility. Also, don’t be afraid to call your insurance agent every year and shop the premium.
- Cable Bill. Remember when you signed up for cable services and received certain movie or sports channels free for six months? The good news: you still have those channels. The bad news: you are now paying for them! Next time you receive a bill, take a closer look at the itemized costs. And remember, the average person only watches sixteen channels per year! This fun fact may save you money by rethinking the 845 channels in your cable package.
- Cell Phone Bill. Do you really need unlimited minutes, text, and data? Go to your carrier’s website, log-in, and print off three months worth of phone usage. When your contract is up, take this information to cellular competitors, and have them analyze your information to find the most appropriate plan for you.
Summary
When it comes to funding your financial goals, procrastination is your nemesis. Take control in 2014 by choosing to save monthly. If you do, your next Holiday Season could be stress free. Now, doesn’t that sound better?