Start 2014 on the Right Financial Footing

Let's face it: This time of year, we all accept the fact that extra money goes flying out of our bank accounts for holiday shopping, festive gatherings, and whatever else comes with the holiday season.

Because that money isn't coming back (unless you were on the "very good list" and you're expecting a sizable bonus), the best way to tip the scales in your favor is to use these "end-of-year holidaze" days to plan out your financial future for 2014 and beyond.

A few basic rules to establish before we get started:

  • It's never too early to map out your retirement nest egg (considering your retirement finances do not, in fact, cause you to go gray or wear black socks with sandals and shorts -- that happens organically).
  • If you've recently started a family or are about to, it's time to factor child care, schooling, and college funds into your planning.
  • While a "gift" of a starter savings account or lump sum deposit may be less exciting to unwrap than a set of tube socks, the recipients will be thanking you later.

(More from A Year's Worth of Money Resolutions)

Retirement? Why now?
"Why not now?" for your retirement planning is the better question.

Just the mere fact that you're using some of your brain bandwidth here to imagine retirement means there's no better time than the present to set things in motion for when it's eventually time to call it a career.

If your employer has a 401(k) plan, which is a retirement savings plan funded by pre-tax salary contributions, let's already assume you are a participant. If not, stop reading right this moment and sign up.

We'll wait.

Existing participants should take this time to review how personal budgets align with contributions to date. If you can comfortably afford to designate more to your 401(k), by all means make that change. Your future self you will thank you.

Necessity vs. luxury
We all take for granted that bills come due every month, whether it's a mortgage, rent, utilities, gym membership, or online subscription.

Granted, you need to make those payments to maintain a roof over your head, and it's probably helpful to keep up the funds for electricity, gas, and garbage removal.

Now, however, is a great time to reevaluate other monthly dues to see what's a "need" versus a "want." Consider trimming infrequently used items that are the latter.

(More from Need vs. Want: A Roadblock to True Savings)

Are you using that gym membership? Do you need that second credit card with the annoying fees attached? Are you using your various online accounts enough to warrant the same level, or can you save some money by scaling back?

In addition to those items, the end of the year is a terrific time to review fringe utilities such as cable, phone, and mobile phone accounts to see whether you still need all the bells and whistles wedged into each.

Call up local service providers to review recent account usage and see what changes could benefit you financially. However, be vigilant against the dreaded upsell attempts.

Ensure the Insurance
ou probably prefer to give as much thought to your insurance policies as you do to those retirement plans, but take this time to give them the once-over.

Do your policies match your current lifestyle? Could you benefit from consolidating polices currently spread across providers?

You're in a safe place here, so go ahead and admit you've been putting off responding to those unprompted calls from your insurance company to review your polices. No time like the present (yes, holiday observers, we went there) to look through the ins and outs with a fine-toothed comb and see what chances could prove beneficial.

Oh, and if you've never had to factor in life insurance, flexible spending accounts, or long-term care plans for loved ones yet and the mere mention flicked a switch on your internal light bulb, now is the time.

(More from When is the Right Time to Buy Life Insurance?)

Less taxing taxes
Use this time to tidy things up in several areas before the calendar flips.Such a review will help give you a rough estimate of your income tax bill so you won't be in for any shock come April.

Give the ol' once-over to your holdings for any investment losers you should consider selling to offset capital gains. You may also want to sell off any appreciated securities before the year's end.

Income shift
Look over the deductions you put in place for this past year and, with the help of a tax professional, determine if changes need to be made for better tax implications. You might still catch your tax pro before the busy season kicks in.Smart planning for a shift in your tax bracket, assuming you can "crystal ball" such a change for the bulk of 2014, is also done before year's end.

If you think you may be in a lower tax bracket for the coming year and have some say in the timing of upcoming income such as year-end bonuses, capital gains, or self-employment income, you could defer some taxes by holding off receiving those until early next year. Of course, your tax rates could end up being higher in 2014, so make sure to get a professional second opinion before making any drastic alterations.

What better way to wrap up (yes, we went there, too) this timely discussion than factoring in charitable contributions?

Take stock of any donations you make to charities, whether by cash, credit card, appreciated securities such as stocks, or used vehicles.

You can make a deduction on your taxes for the fair market value of such contributions, given you include a letter of acknowledgment from the charity that shows the date, amount, and whether you received any benefit in exchange, such as a thank-you gift.

Your largesse benefits others, especially this time of year, and done right it could benefit you as well.

So, yes, we know watching that holiday cash vanish from your accounts is still painful, but hopefully it's a little less so with these tools.

Jim Staats is a technical support analyst at, the leading, free, and secure service that helps consumers simplify and organize all of their bills and household accounts in one place online or via the 4-plus-star customer-rated mobile apps. He has a bachelor's degree in industrial technology from California Polytechnic State University at San Luis Obispo. Wedged between stints supporting products at firms including Intuit and Sybase, Jim worked as a journalist reporting on real estate, business, technology and other issues for print and online publications.

The article Start 2014 on the Right Financial Footing originally appeared on

Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story