It has also been a year ripe with opportunity — but it’s not over yet, and there’s still time to make some positive changes in your financial trajectory. Before you make financial resolutions for 2020, we have a few suggestions for ending this year on a stronger note.
Avoid a holiday spending blow-out
Yes, the approaching holidays offer lots of opportunities for joy, but don’t allow overspending to blow the budgeting progress you’ve been making. Don’t succumb to unnecessary spending or, worse, assume new debt that you can’t quickly repay.
Instead, focus your resources where they matter most: spending quality time with family and friends, rather than paying for expensive gifts or outings. Studies show that we derive more emotional benefit from experiences rather than possessions, so create a budget that prioritizes togetherness over expensive gift-giving.
Here’s a quick plan for avoiding the temptation to overspend: First, identify how much you spent last year. Look through credit card or bank statements to formulate a rough idea of last year’s spending. Then, assess how much difficulty you had affording it. Did you take on debt to do so? If so, aim to create a holiday budget that won’t get you into debt, remembering how long it took to payoff the debt last year.
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Identify where the money will come from for spending, such as from a holiday bonus, regular income, savings or a side gig. Finally, re-calibrate your own expectations, as well as those of family and friends, towards that time well spent, rather than big parties or gifts.
Update your budget, withholdings
Speaking of budgets, now’s also a great time to update yours so that it reflects your current income levels and goals. If you ’re like the average American, who saw their income increase about 4% this year, it may seem acceptable to spend more — but ask yourself if you really should.
If you can continue living fine on last year’s income, apply the extra money to savings, debt repayment or investments. Pay yourself with it — instead of holiday retailers. It’s your hard-earned money, and we hope you’ll keep more of it for your own financial future.
It’s also prudent to adjust tax withholdings now, based on your current earnings, career and home circumstances. New dependents, a higher income bracket or a change in address are all examples of situations that may affect your tax calculation. To avoid incurring a tax bill, speak with your accountant or human resources team to help you select a withholding level that minimizes the risk of underpayment.
Tune up your retirement plans
Use the remainder of 2019 to ensure your financial future is on-track by giving your retirement savings funds an annual check-up. Now’s the time to increase your annual contributions to a tax-advantaged retirement savings plan such as a 401(k) plan or individual retirement account. Even an increase of 1% adds up over time. (You should ideally be contributing 10% to 15% of your income, but at least put away what you need to get your full employer match. Otherwise, you’re leaving free money on the table.)
Also, take a look at your retirement investments. Do these still match your overall objectives? Make adjustments that reflect your long-term goals and needs.
Those long-term objectives are what should give your financial choices form and shape. We talk a lot about planning for your financial future, but that means different things to different people.
For some, an early retirement and aggressive savings now are the key to happiness, while others want (or need) to work until retirement age or beyond. What’s your vision for the future?
As you re-balance your portfolio, increase your savings and contributions, and work toward ending 2019 on a positive financial note, it’s important to keep your long-term vision in mind.
Use this opportunity to visualize how you want to love five, 10 or 20 years from now. The steps you take during the last days of 2019 can steer you in that direction.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.
This story first appeared on CNBC.com. More from CNBC: