1.) Max your 401(k)
Make dang sure that you’re putting enough into your 401(k) so that by the end of the year you’ll hit the limit. Now that we’re halfway through the year, you should have $9,000 saved. Or if you’re 50 or above, $12,000 ($24,000 is the 2017 limit for folks who are 50+). So check your pay stubs and make sure you’re at that mark, and if not now is the time to adjust. Also, if your employer matches you, make sure that’s maxed out as well. That’s no-brainer free money.
2.) Lower those fees, baby
While checking in on your 401(k), check the fees on your investments. Your 401(k) plan is required to send you an annual-fee disclosure statement that lists every fund and how much it costs to own. See if there are other funds with lower fees. Sometimes there are new, lower cost options available.
3.) Self-employed: Check-in on your taxes
Get in touch with your tax person and give them a snapshot of your finances. Make sure you talk about any tax credits or deductions that you’ve become aware of. Knowing this info early can allow you time to make adjustments.
4.) Take a peek at your investments
Take a close look at your portfolio. Do you need to rebalance? Over time, some of your assets may rise or fall in value, causing the percentages of your investments to change. Rebalancing every now and then helps align your investments with your goals. It’s also a risk-minimizing strategy.
5.) Drop the losers
If you have investments in your taxable account that aren’t doing well, now may be the time to ditch them. Then you can use the losses to offset gains elsewhere in your portfolio. At the end of the year, if you have more losses than gains, you can deduct as much as $3,000 in ordinary income. If you’ve had a really bad year and ended up with a net loss of more than $3,000, you can carry forward the leftover portion to next year’s taxes.1
6.) Use it or lose it
If you participate in a company-sponsored plan for healthcare benefits or dependent care, flexible spending accounts (FSAs), check the balance in your account and don’t leave an unused balance at year-end. FSAs operate with a “use it or lose it” policy, meaning that you must use all of the money you deposited into the account by the end of the plan year or you will lose your money.2
7.) Give and thee could get
It feels good to give. In fact, studies show that donating money to help improve the lives of others is enough to boost not only your self-esteem, but your sense of purpose.3 It can also potentially lower your tax expenses. A win-win. So take a look at your numbers, and find some causes that you believe in.
Summer is the time to slow down. But now that we’re just past the year’s halfway mark, it’s also a great time to take the pulse of your finances and do a quick tune up. It can help you for the end of the year, and you can even do it from the hammock.
If you’d like an objective second opinion about your finances, please contact Michael Shea, a CERTIFIED FINANCIAL PLANNER at Applied Capital. Email him at [email protected]
This blog is provided for informational purposes only. Such views are subject to change at any point without notice. The information in the blog should not be considered investment or tax advice or a recommendation to buy or sell any types of securities. Some of our blogs or information therein have been obtained from third party sources believed to be reliable but such information is not guaranteed. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular investor’s financial situation or risk tolerance. No reliance should be placed on, and no guarantee should be assumed from, any such statements or forecasts when making any investment decision.