4 Year End Financial Moves To End 2012 With a Bang!

I can’t believe it’s almost that time of year again! We’re saying goodbye to 2012….and it seems like we just said goodbye to 2011. This can be a crazy time for creatives. We’re busy building, sculpting, performing. But don’t forget that the end of the year is also a time to close the books on your financial life so you can begin 2013 fresh. Here are some of my favorite year end moves:


Paperwork & Technology Moves

This is a great time to shred unnecessary papers from the year and delete unnecessary emails. Set up your systems to ensure you roll easily into 2013.

–  If you haven’t yet, create a series of email folders to funnel important financial documents. I also like the free financial tool Dropbox to store important papers in “the cloud” so they’re available from any computer.

–  Adjust your budget. Automate budget tracking if you have a smart phone or computer using programs such as Mint. Last week I went over my grocery budget and before I’d unloaded the groceries into my car, Mint had already emailed me a warning.

–  Create times to plan. Take out your 2013 calendar (or purchase one!) and lay out non-negotiable times to review your overall financial picture. You might want a quick once-a-week to review your budget, pay bills and review any new investment correspondence. More important is a twice-yearly “where am I” session.

Charitable Deductions

While charitable organizations need your help all year long, if you’re deducting contributions there are a few tasks that must be accomplished before midnight, December 31.

–  Give away unnecessary clutter. If you clean out your closets, wardrobe or garage, make sure the group your donating to is something called a “501c3 organization.” This means that you can legally take an itemized deduction for the value of your gift. Check with a tax pro about valuing donated items. Rules have changed significantly in recent years.

–  Donate your art. If an organization can use your talents for a fundraiser, you can donate the value of your craft. Check with your tax professional about how exactly to ask organizations to word the receipts for these gifts of your labor.

Insurance & Estate Moves

Sadly, the joy of the holiday season also is a time when many contemplate “what if.” Before the new year, examine your insurances and estate plan.

–  Review your life insurance. If you don’t have any, this is a great time to start the process. For most people, term insurance is the best way to start because it combines low cost with large amounts of coverage when compared to other types.

–  Complete your estate plan. For some, this is as easy as heading to the library and finding a do-it-yourself will kit. If you have special circumstances (multiple marriages or children with different spouses come to mind), contact an attorney to complete your estate correctly. Make sure you ask about an advanced health care directive. This document allows someone to talk to medical professionals on your behalf if you’re unable.

Portfolio Changes

Do you have investments? If they aren’t inside an IRA, there might be some opportunities to reduce your taxes. If they’re inside an IRA, 401k or other tax shelter, the end of the year is the perfect time to evaluate whether you’re on the right path before the New Year.

–  Boost your investment savings. If you aren’t saving, start something that’ll take effect in 2013. If you are saving, bump up the amount. You can always lower it later. If you are afraid to save more, ask yourself this: how afraid will you be later if you haven’t saved enough money? I’d rather be a little afraid today and have to lower my contribution than never try and be afraid when I can no longer work.

–  To deduct losses in your portfolio, you’ll need to sell in 2012. Decide whether you want to sell a stock or bond that’s lost money, pull the trigger to sell it and record the amount of your loss for tax time. If you have gains that you want to capture, you can use these losses to “offset” the gain. This means that if you have $1,000 of losses, you can have $1,000 in gains before you’ll pay any capital gains taxes.

There they are….four big moves to finish 2012. Imagine you’ve already tackled these: your budget is in order, investments are in line, you have a plan of attack using technology for the new year, and you don’t have to worry about your insurances and estate plan. How wonderful will you feel then? Write me and let me know what you did to get ready for the New Year. I’d love to hear from you.