This year is almost over. Finally. But don’t mentally move on until you’ve crossed a few more things off your money to-do list.
Some things can’t wait. A little more effort (really, just a little) now can pay off later. Here’s what to do now:
Do good and keep receipts. Donating money on or before December 31 can trim your 2020 tax bill. A CARES Act provision lets you deduct up to $300 in donations to qualified nonprofits, even if you take the standard deduction instead of itemizing. Just be sure to vet charities before you donate, so you know your money will be put to good use.
Don’t leave any work perks in 2020. Like your FSA money, which may go away if you don’t spend it (unless your company offers a grace period or lets you roll some over). Heads up that you can use FSA funds to buy OTC meds, contacts, tampons, and more. Ask HR if there are any other use-it-or-lose-it benefits, like a stipend to set up your WFH space. Or even some help repaying your student loans. A CARES Act provision lets employers cover up to $5,250 of employees’ student debt, tax-free. But it expires on NYE, so check in ASAP.
Check in on your travel rewards. Credit card points typically last forever. Airline miles and hotel rewards usually don’t – though some companies have extended their expiration dates, thanks to the pandemic. So do a quick status check. If your points or miles expire soon, look for ways to redeem them now, like buying from the airline or hotel’s shopping portal.
Figure out if any recent life changes will affect your taxes. Like if your salary changed, you got a side hustle, or you relocated your home office to a different state. Those moves could mean a more complex tax return, so be ready. Get your paperwork in order now, including tax forms you might not have needed last year.
Yep. The end of the year is a good time to check in on your money goals. A few ideas:
Save more for (way) later. You have until Tax Day 2021 to make retirement contributions that count for 2020. But the sooner you invest, the more time your money has to grow. Also think about upping what you set aside for retirement in 2021 by 1% or 2%. You probably won’t even notice the difference in your paycheck. Extra credit: look into rolling over any 401(k)s from old employers.
Check in on your budget. Don’t wait for resolution season to make sure your spending plan is still working for you. Start now by cutting extra costs you can live without. And try to negotiate down fees for services you could be overpaying for. If your federal student loan payments have been paused for a while, add that payment back into your February budget. (ICYMI: in early December, the Dept of Education extended the "administrative forbearance" expiration date from December 31 to January 31.)
This past year may have been rough on your wallet. And some of your plans probably had to take a backseat to the pandemic. Doing some quick chores now – then revisiting your longer-term goals – can help you get back on track in 2021.
Say ‘hi’ to our weekly newsletter. Every Friday, we break down the news and info you need to make smarter money decisions.
Skimm'd by: Ivana Pino, Stacy Rapacon, and Elyse Steinhaus