2019 is quickly coming to an end. The coming months represent not just the last few weeks or the year, but of the decade. Here are a few financial tips to consider as we approach December 31st:
- Income Taxes – If you are paid irregularly, on 1099, or own your own business, you are required to pay your own federal and state income taxes throughout the year. Unlike withholdings from a W2, it can be more difficult to calculate exactly what your liability will be. Miscalculations can lead to underpayment and far worse, interest and penalties. If you are not paid on a W2, it may make sense to run your taxes a bit early and if a liability is due, make the payment before December 31st to reduce or eliminate any potential interest or penalties.
- IRA/401k contributions – As the year comes to a close, so does the opportunity to make retirement plan contributions. Although the window for IRA contributions does not shut until April 15th of next year, 401ks, and other qualified plans run on the calendar year. Take a look at what you have saved and compare that to your retirement plan. If you have fallen a bit short, consider increasing your withholdings percentage between now and the end of the year to stash away more cash.
- Roth Conversion – December 31st is the last day to execute a Roth conversion for 2019. With current income tax rates so low, this may be an opportunity that is too good to pass up. However, there is a lot of nuance to Roth conversions. For more information, I recommend reading our blog post from September 2019 titled: “What is a Roth Conversion and is it Right for Me?”.
- Financial Plan – If you do not have a financial plan in place, there is no time like the end of the year to get one. Consider your long-term retirement goals, savings objectives, and plans for 2020 to develop a budget and savings plan that works for you.
2020 is right around the corner. Spend a little time on your personal finances and I can promise you that you will set yourself up for a financially successful 2020 and beyond!