As another year ends and we start thinking about the new year (and some new resolutions to go with it), it can be a good time to look at our financial lives and reassess.
The good news is many of these ideas don’t take nearly as much work or time as losing 10 pounds or finally getting all the family photos organized.
Here are four ideas you can take action on as 2015 comes to a close to make your life (and others’ lives) better in 2016.
Contribute up to the maximum amount in your IRAs.
According to the IRS, you may contribute up to a total amount of $5,500 if you are under age 50 or $6,500 if you are 50 or older. If you find yourself with a little extra money, even if it’s $100, put it in your retirement savings and let it grow with compound interest. Think of it as giving your future self a really nice gift.
Start automatic contributions into savings.
All it takes is a simple form we can help you fill out to make an automatic amount sweep from your regular checking account into a savings account weekly (or monthly). Even though this time of year it can feel like you have no extra money, start having a small amount (like $25/week) put into a savings account automatically. You’ll hardly miss it and it will be there when you need it, while earning a little interest along the way.
Consider making an extra mortgage (or other) payment.
While it may be tempting to spend your holiday bonus or gift money on something fun for yourself, consider using any extra cash at year’s end to make an extra payment on your mortgage, student loans, or other loans with interest. Doing so, even once a year, can significantly lower the interest you pay.
Start or contribute to a college savings plan for the kids in your life.
This time of year, most kids are in a sea of new toys and hardly remember who bought them what. Instead of buying the latest and greatest toy, consider giving a small present for a child to open and putting the rest of the money you would have spent in a 529 plan or other savings vehicle. (You can talk to the child’s parents and see what they’d prefer if you want to be sure.)
What do all these ideas have in common? They mean using what you have today to create something even better for the future. And isn’t that what new year’s resolutions are all about?