6 Financial “To-Dos” Before Year End

fortpitt in Wealth Management 28 August, 2014

During summer, it’s a natural inclination for families and individuals to put investment planning, budgeting and other personal finance concerns aside. However, as vacations wind down and people slowly get back into their normal routine, it’s likely that finances will again be top of mind. Over the coming months, it’s advantageous to make finances a priority and to get a good handle on your monetary situation before the end of the year.

Below, we outline a variety of financial and investment related to-dos that are important to consider now that summer is behind us, and year-end is fast approaching.

  • Get back on a disciplined budget. September usually marks a good time to review summer spending patterns and prepare for the holidays ahead. By identifying bad financial habits (undersaving or overspending) now, you can get back on a disciplined financial track and avoid discretionary spending that may have derailed efforts during the warmer months.
  • Review investment plans. During the summer, it’s easy to avoid financial headlines or let investing statements sit unopened. However, with four months left until the end of the year, now is the time to check back in with an advisor, rebalance fund allocations if necessary and make proactive changes for taxable accounts before December 31. (Avoid rushing at the end of the year and your tax preparer will thank you).
  • Take advantage of tax savings before year-end. Review how much you have contributed to an employer sponsored plan (401(k) or 403(b)) and determine whether you can do a better job of maximizing what you are allowed to put away for the rest of the year. For other retirement vehicles, such as a traditional or Roth IRA, there is still enough time in the year to get as close to that maximum funding number (Under 50 – can contribute $5,500 per year; Over 50– can contribute $6,500 per year) and take advantage of lowering taxes and boosting retirement contributions, a win-win!
  • Take a look at medical expenses. If your employer has a flexible spending account option, now is a good time to review spending that you’ve had on qualified medical expenses so you can take full advantage of what you’ve put away, and budget for next year in order to maximize tax savings of that plan.
  • Transfer wealth the right way. For folks that are intending to hand over financial gifts this year, it’s important to understand that up to $14,000 tax-free is allowed to be gifted to an individual before year-end. Work with an advisor, as the ins and outs of passing wealth get more complicated depending on what vehicle the transfer will take place through (cash, marketable securities, etc.).
  • Manage debt in an efficient way. Paying down debt can always be a tricky situation when you add in other financial priorities. Our rule of thumb for paying down debt is to focus on interest rates that are higher than 8 percent—and make it a high priority to pay it down first and foremost. Especially in today’s market, it is hard to get higher than 8 percent on an investment, so it’s more beneficial in the short term to pay down the debt first.

With 2014 more than halfway over, enough time has passed that we can review financial information from the previous eight months (mistakes made, changes not yet enacted, etc), but still have enough time before 2015 to get financial plans back on track and strengthen overall strategies to maximize your monetary future.

Before making any investment decision we encourage you to consult with your tax, legal and financial advisors. For more information regarding the products and services offered by Fort Pitt, visit www.fortpittcapital.com.


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