4 Financial Moves to Make This Fall

Financial Planning

Fall is a celebration of change, which makes it the perfect time to check your financial matters and optimize the power of your money.

Here four financial moves to make this fall:

Check your Federal withholding.

According to Internal Revenue Service (IRS) data, “taxpayers received tax refunds averaging $2,913 in 2011.” Though receiving a Federal or state tax refund may feel like a ray of light amidst of the doldrums of winter, it’s actually a telltale sign that you’ve missed an opportunity to optimize the value of your money.

In short, receiving a tax refund means you “loaned” interest-free money to the government, thus, tying up funds you could have used to pay off debt, invest, or build savings.

Checking the accuracy of your current tax withholding is a simple process that requires just three things: your most recent paystub, a copy of last year’s tax return, and about thirty minutes. Access the IRS’ free online withholding calculator to estimate how much you’ve paid in taxes this year, compared to how much you’ll ultimately owe.

If you’ve withheld more than your share, submit a withholding change to your human resource department and return more of your hard-earned money to your paycheck.

By the same token, if you haven’t paid enough taxes to cover your bill, you can begin a savings plan to account for the amount the IRS will require you to pay before taxes are due.

Build your holiday budget.

Fall is the precursor to holiday spending and it’s your last chance to avoid holiday debt by forming a savings and spending strategy. According to 2011 TurboTax data, Americans spent $516 on gifts for family, friends and co-workers, and purchased about $190 worth of decorations, holiday food and candy, greeting cards and postage last year.

Create a list of every holiday expense you foresee, including gift cards, stocking stuffers, expenses related to holiday parties, hostess gifts, exchanges at work, baking, wrapping paper, greeting cards — and anything else that has historically snuck into your budget in the throes of the holiday rush.

Once you’ve arrived at a grand total, devise a personal savings plan with an end goal of early December so you can work towards it little by little. For example, a person with the “average” holiday spending profile above could bank the $706 by December 1st by setting aside just $23 a day, starting with Halloween.

In contrast, an unprepared holiday shopper charging that amount and making minimum payments on a “low interest credit card” (at a current annual percentage rate of 10.95%), would need more than two and half years—and an additional $115 in interest expenses to pay off the debt.

Confirm where you stand in your work-sponsored plans.

If you dedicated pre-tax income from your paycheck into flexible spending health savings plans at work, remember: you have to “use it, or lose it” before the end of the year.

Check the balance on your accounts and keep in mind that prescription drug expenses and some over the counter drugs qualify. If you’ve procrastinated doctor visits, schedule appointments now for no later than early December to ensure that billing is finalized before the year’s end.

While you’re accessing the account, analyze how close your estimated medical expenses were to reality this year so you can hit the mark closer during open enrollment, which occurs during late fall and early winter for most employer insurance plans.

If you’ve got plans to start a family, know you’ll leave your job next year, or plan to have a major medical procedure, consider those adjustments now in your open enrollment plan.

Lastly, check the status of your work-sponsored retirement plan. For 2012, the pretax 401(k) limit is $17,000 (including employer contribution). If you’re 50 years or older and are “catching up” on contributions, you can invest an additional $5,500 pretax 401(k) dollars for 2012.

Do you feel like you can’t possibly devote more funds to retirement this year? Consider the cost of the missed opportunity. According to CBS News, making pre-tax contributions of $17,000 will amount to a savings of about $6,000 in Federal and state income taxes each year.

Be proactive with your home.

Whether you’re an owner or a renter, winter is a costly season for energy bills, so take proactive steps to control costs before they threaten your budget. Adaptive building consultant and Inhabitat.com contributor Andrew Michler says, “30% of an average home’s energy cost is associated with heating.”

Change the filters in your heating system and schedule a professional furnace duct cleaning before cold weather sets in. This will increase airflow, deduce pollutants, and detect deadly hints of carbon monoxide.

If your windows are drafty, Michler says insulating blinds can double or triple a window’s efficiency and simple caulking around the frames can improve heat retention.

Stephanie Taylor Christensen is a former financial services marketer based in Columbus, OH. The founder of Wellness On Less, she also writes on small business, consumer interest, wellness, career and personal finance topics.



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