Santa's End-of-the-Year Finance Tips - msnNOW
What's up, everybody? It's your boy, Brandon Copeland, aka Professor Cope, and you are now tuned in to another episode of Cope'ing With Money.© Provided by Kiplinger
On this episode of Cope'ing with Money, we are reaching the end of the year, and the holidays are in full effect. So, to keep with that holiday theme, we want to keep it festive, keep it fun, keep it flexible. And we are going to be pulling tips and gifts from Santa's hat.
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We are ending 2021 on a high note, but more importantly, we have to make sure that we finish through the line and finish strong to set ourselves up for a huge 2022. That's why today we're talking financial tips and tricks for the end of the year.
So, without further ado, it's time that we start pulling some gifts out of Santa's hat.
Take Last-Minute Tax Deductions
What we got here, what we got here? Woooooo. Take any last-minute deductions that you can. Now, with the year coming to a close, it's time to close up our books for our personal businesses, but also us as individuals. However, there might be some places where you can make some last-minute wins going into 2022, especially from a tax standpoint.
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For example, you can lower your tax bill in 2022 by making a donation to charity in 2021. And, if you haven't done so already, for those who are married and filing jointly, you can deduct up to $600 on your tax return. And for those filing as individuals, they can deduct up to $300 on their tax return, depending on the donation that they make.
Like with all these strategies, you want to make sure that you check with your own tax professional or financial advisor to ensure that you are making the best decision for yourself. You can also check out sites like Charity Navigator which rate charities to make sure your donation is having the largest impact possible.
Evaluate Your Investments
Now, let's reach back into Santa's hat. What the? Get off me! Here we go.
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Take this opportunity to evaluate your portfolio thoroughly and consider selling off losing positions today. If a stock you've invested in has lost money, ask yourself: Would I buy more shares at this new lower price?" If the answer is no, it may be time to move on.
Luckily, we can take this capital loss as a deduction on our taxes to offset capital gains from our winning positions or on up to $3,000 of ordinary income.
There are stipulations around how you do this, especially when it comes to stock and security assets. These assets are highly regulated, meaning you can't just sell your shares one day and then buy them back the next, before the price goes up.
Video: How much you'll have if you invest $1,000 per month until you retire (CNBC)
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How much you'll have if you invest $1,000 per month until you retire
How much you'll have if you invest $1,000 per month until you retire
That is not the case, however, in our cryptocurrency positions. Cryptocurrency is decentralized and therefore deregulated. Meaning, it's possible to sell low to maximize your deduction, and then buy right back in to maximize profits. This is known as a "wash sale loophole." As always, make sure to research more and find out if this is the right move for you. But, those are two things to consider, depending on the different types of portfolio or asset classes that you hold.
Max Out Your Retirement Accounts
Next tip. What else is in Santa's hat? There we go.
Have you maxed out your retirement accounts yet? As we've talked about throughout the year, you have your 401(k), your employer-sponsored retirement accounts, you have your individual retirement accounts, your Roth and your traditional IRAs.
Remember: For your 401(k), the amount that you are able to contribute this year is $19,500, or $26,000 if you are 50 or older, because you have the opportunity to take advantage of catch-up contributions. For your IRAs, your Roth and traditional IRAs, you have the ability to contribute up to $6,000. And if you're 50 or over, you can contribute up to an extra $1,000 for the fiscal year.
Check Your Credit Score
Oh, this is a simple one! Check your credit.
Let's make sure that we are checking our credit, keeping our score strong, understanding anything that we may need to dispute on that credit score, and making sure we have a firm grip and understanding of where we stand heading into 2022.
If you have some big purchases on the horizon in 2022, what are we doing to save for that? Is our credit in a strong enough place to get the interest rates that we want for a 30-year mortgage, a 50-year mortgage or a new car loan? Using a site like AnnualCreditReport.com will not lower your credit score, but a hard checkup from a creditor or lender will. So, make sure that you time this credit checkup accordingly based on your own personal aspirations for 2022.
Plan Out Your 2022 Budget
Oh, let's get ready for 2022. Have you created that budget yet? If you have not, go to life101.io, go to the Resources tab, look at that budget. Let's understand our monthly expenses so that we can create that monthly income stream to start chipping away at that.
2022 is the year that we do not look back financially. We are going to put our plans into action and start hitting the gas on all of our dreams and aspirations financially. We're not looking backwards. But, let's start with that budget and get that number of monthly reoccurring expenses, so that we can start making positive change going into January 2022.
Set Your Finance Goals for 2022
Finally, as an athlete, I'm a goal-oriented person. So, for all of those goal-oriented people out there: What are our goals for ourselves? What are our goals for our net worth? Do you have an idea of what your net worth is today and where you hope and plan to take it in 2022?
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One of my favorite rappers, Kevin Gates has said, "A vision without action is merely a dream." And yes, we have the opportunity to envision things. And that's what we are doing right now during this month. But if we don't envision it and we can't fathom it, even within our own brains, it'll never be realized in real life.
So, what is our action plan for this year? What money do we want saved? How much money do we plan on having invested? We need to start to realize this.
What are our wants? Let's put them down on paper and then let's go work and execute until we make it happen.
2021 has been another interesting year, to say the least, but guess what? We are all here. And, as my grandfather used to say, our heads are above ground. And if our heads are above ground, we have a chance. So, I am going to put my action steps on the paper and we're going to go make them happen. I hope you all do the same with me.
In the meantime, Happy holidays, Happy New Year, have fun. And I will see you all in 2022.
Cope'ing With Money, peace.
Links and Resources Mentioned
- Charity Navigator
- Cryptocurrency and the Wash Sale Rule: A Tax Loophole That May Soon Go Away
- Life 101
- Follow Brandon Copeland on Instagram and Twitter, or send him an email.
- Follow Kiplinger on Facebook, Instagram and Twitter
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