Personal Finance

It’s not too late: 8 year-end money moves to make before Dec. 31

By December 1, 2018 No Comments

Most people start the New Year off by resolving to do better when it comes to diet, exercise and paying down debt. Alternatively, you can take a proactive approach and reel in your finances before this year ends. (Resisting holiday treats is another story).

Even with most Americans feeling more financially secure than they did five years ago, many are still concerned about their cash flow and struggle to set aside any type of savings.

About 40 percent of adults said that if faced with a $400 unexpected expense, they would either not be able to pay it or would do so by selling something or borrowing money, according to the Federal Reserve’s Report on the Economic Well-Being of U.S. Households.

Rather than starting 2019 with another financial resolution, there’s still time to make 2018 a little more lucrative. Here’s how:

When it comes to money matters, most Americans worry about unexpected expenses, making ends meet and health-care costs, according to a study by LendingTree, which had polled more than 1,000 adults about their resolutions for 2018.

One of the best ways to deal with unexpected expenses is to make sure you have enough money set aside. That’s where rising interest rates can help.

As the Federal Reserve raised its benchmark rate, yields on savings accounts have increased, as well. While the average interest rate on a savings account is still only 0.2 percent, some top-yielding savings accounts are now as high as 2.25 percent and you can earn even more with CDs, or certificates of deposit.

With a savings rate, or annual percentage yield, of 0.2 percent, a $10,000 deposit earns just $20 after one year. At 2.25 percent, that same deposit would earn $225.

There is no magic formula for being able to make ends meet. You have to live within your means and to do that you need to budget. Having a budgeting app on your phone makes it easier to accomplish that.

Apps such as Mint or Albert keep tabs on your spending and help find places where some expenses can be cut. You can even set budgets that alert you when they start to top out.

Pocketguard is a simpler alternative. It just tells you how much you have for spending after accounting for bills and savings goal contributions. Then you can see how much money is left “in your pocket” for the day, week or month.

Run a credit checkup to know where you stand. You can get a free report from each credit reporting company annually at

Studies show that checking scores more often helps you manage and maintain good credit.

To make sure that you’re able to finish the year on solid financial footing and set yourself up for a strong start to 2019, this is a good time to check in with a financial pro or even a robo-advisor.

Robo-advisors, which have come a long way, can give you access to automated investment strategies and create portfolios for less than it would cost to work with a human. However, they do come up short when it comes to financial planning and addressing any specific financial concerns you may have, such as a job change, move, illness, change in marital status, buying or selling a home, or paying for a child’s education.

Still, working with a robo-advisor provides a low-cost solution to investors who are just getting started. And lower costs mean more money to invest.

When it comes to medical expenses, this is the time to pay extra attention to what lies ahead.

If you’ve already met your health insurance deductible for 2018, you can save money by scheduling appointments and procedures before the end of the year — rather than waiting until 2019 when you begin a new year and your deductible kicks in again.

Keep in mind, though, your plan may have a maximum number of visits for certain things like dental cleanings or physical therapy visits.

It’s use it or lose it time for many with flexible spending accounts. Unless your employer offers a grace period or rollover option, the pretax money you have in a FSA must be used by Dec. 31.

You can spend what’s left on contact lens solution, cough medicine, first aid kits, high-SPF sunscreen or even lip balm. Look to see what qualifies as accepted expenses.

More from Personal Finance:
Baby boomers face more risks to their retirement than previous generations
How long $1 million lasts in retirement
Kids, this retirement account is for you

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(Health Savings Accounts, or HSAs, work differently than FSAs in that you have an unlimited amount of time to reimburse yourself for eligible medical expenses. Yes, you can still use the money now to cover health-care expenses without depleting your cash on hand, but leaving money in an HSA long-term will enable you to use those funds to cover health-care expenses decades down the road.)

With everyone together over the holidays, this is a good time to talk about your estate plan or come up with one if you haven’t already done so.

An estate refers to what you own: financial accounts, real estate and possessions. Hashing out how those things will be distributed can head off any fighting among your kids and limit the amount of taxes your heirs may have to pay.

It’s also important to name people to several key roles, including an executor of your will, and powers of attorney for both health care and your financial affairs if you become incapacitated while still living.

Meanwhile, double check the beneficiaries on your retirement and insurance accounts. People often mistakenly think that in their will, they can name who gets the money in retirement accounts, life insurance policies and the like.

That’s wrong. The person listed as the beneficiary on each of those accounts will get the money, even if your will says otherwise.

Also, when changes happen in your life such as a break up or remarriage, remember to update the beneficiaries on those accounts.

“On the Money” airs on CNBC Saturdays at 5:30 a.m. ET, or check listings for air times in local markets.

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