As 2016 comes to a close, it's time to review your financial life and tie up any loose ends of your finances. It's the best time to analyze your financial situation, fast-track your goals, and boost your savings. This will help you end 2016 on a financial strong note and start off your New Year with a bang.
Here are 5 easy steps to end 2016 on a financial positive note:- Take a Look at Your Finances First of all, review your finances to check whether your financial life is on the right track or not. Second, analyze your financial habits to determine whether they have helped you achieve your financial goals of 2016 and what else you can do to improve your finances for 2017. Last, check whether you were able to increase your assets and reduce your debts in 2016 and see what needs to be changed for the coming year.
- Maximize Your Retirement Contributions If you have a 401(k) or IRA account, make sure you contribute the maximum amount to your retirement plans. If you are below 50 years of age, you can contribute a maximum of $18,000 to your 401(k) this year and if you are above 50 years of age, you can contribute $6,000 more or a maximum of $24,000. For IRA, you can contribute $5,500 or $6,500 if you are 50 years or older. All these contributions will be tax-exempt.
- Utilize Your Medical Expenses Threshold According to IRS, you can deduct any medical bills exceeding 10% of your annual adjusted gross income. If you are above 65 years of age, this threshold is 7.5%, but it will rise to 10% in 2017. Senior citizens can try to rack up any medical expenses before the end of the year. If you have already reached your annual insurance deductible, you can get refills on prescriptions before 2016 ends.
- Make Charitable Donations Score tax benefits by making contributions to charities before the year ends. You can maximize the tax benefit of these charitable contributions by donating investment gains. If you are gifting appreciated securities instead of cash, you will receive double tax benefits of charitable tax deductions and you will not have to pay capital gains on the donated securities.
- Set Financial Goals for 2017 Apart from tying the loose ends of your finances in 2016, it's essential to set financial goals for the next year. Creating a new budget, setting up an emergency fund, and clearing off your debt can be some of your financial goals. The year end is the best time to make financial plans for the New Year, so you can easily manage your finances in the coming years.
