The fun and festive days at the end of the year can also be the most expensive. Holidays, traveling, entertaining, gift giving and parties all put a strain on your wallet, disrupting even the steadiest financial situation. But don’t worry. Here are some smart ways to rein in your spending, and to have a solid understanding of your financial situation, to help you come out ahead ready to take on 2016.
Maximize your 2015 tax deductions with year-end charitable contributions.
According to Charity Navigator, an independent charity evaluator, giving to charities and non-profits in the U.S. totaled more than $358 billion in 2014. A majority of that giving, 72%, came from individuals.* These astonishing numbers show how important personal contributions are to our country. And this type of giving can benefit you as well – your charitable donations are tax deductible. So in the spirit of giving, when you help those in need or contribute to a cause important to you, you also reduce the amount of taxes you’ll pay in 2015. Your donations have to be made before December 31 to apply to your 2015 taxes. Make sure you get a receipt. And most importantly, be sure you give to a qualified organization. Charity Navigator is a great place to start for a list of great charities you can trust.
For additional tax moves you might want to make before 2015 comes to an end, check out the Top 8 Year-End Tax Tips from TurboTax.
Shop smart for the holidays.
It will be virtually impossible to not spend money on the holidays as 2015 comes to a close. But when it comes to shopping and gift buying, there are ways to be spend responsibly.
- Set your budget: Decide what you can afford overall, set amounts for each person, and stick to them.
- Make a list: before you leave home write down where you’re going, who you’re shopping for and stick to it. This will give you a sense of discipline and help you avoid impulse purchases
- Be selective: Do you really need to buy gifts for co-workers, neighbors or friends? A simple card that expresses appreciation for your friendship will mean just as much.
- Be careful shopping online: The prices aren’t always lower, remember to add taxes and shipping when comparing prices.
- Start now: Watch for deals and specials early, don’t wait until the last minute.
- Compare prices: Check out and download one of the 10 Best Price Comparison Apps at Tom’s Guide. This will be especially helpful when shopping away from home and your computer.
Use your home to save money.
Is it time to refinance your home? If you can get a lower interest rate that almost always means lower monthly payments – and extra spending money every month. If you switch to a shorter term, you could potentially save over ten thousand dollars in interest payments over the life of loan. Another option is cash-out refinancing that lets you turn home equity into cash to use however you like, from paying off high-interest credit cards to funding all your holiday expenses.
Don’t spend. Save and invest.
Some gift giving is simply unavoidable during the holiday season. For immediate family, children and adults, consider presents that will have lasting benefits and even improve their lives. Deposit money you’d spend on a spouse into their existing retirement account, or open a ROTH IRA to take advantage of its benefits. Or why not start a retirement a retirement account now your child? Imagine if someone did that for you when you were young. Another way to turn spending into saving is opening a 529 College Savings Plan for a child. Like retirement accounts, it offers tax-free advantages to save for future education. You can start one for your child, then encourage friends and family to not buy presents, but instead contribute to the account.
Getting through the holiday season with greater control and understanding of your money and finances is a great way to close out 2015. There’s no reason you can’t turn these ideas into new habits, or to inspire new ideas, that will stay with you in 2016. And throughout your life.
*See more giving statistics at charitynavigator.org.
