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Ten Steps to Improving Your Finances in 2014

Ten Steps to Improving Your Finances in 2014

Getting your finances on track for 2014, according to Kiplinger's Personal Finance.

• Max out your employer’s retirement savings plan-you can contribute up to $17,500 to a 401(k), 403(b), 457 or Thrift Savings Plan in 2014, plus $5,500 if you turn 50 anytime during the year. See if you can afford to boost the percentage of your income you contribute each month, especially if you haven’t been making the most of any match offered by your employer.

• Make the most of your IRAs-you have until April 15, 2014 to contribute up to $5,500 to an IRA for 2013. Don’t forget about frequently overlooked opportunities to save-such as a spousal IRA if one of you is working and the other is not, or an IRA for teenagers with earned income.

• Get triple tax breaks from a health savings account-more people will have high-deductible health insurance policies this year, either on their own or through their employers, but they may not know whether they’re eligible to benefit from a health savings account. If your policy has a deductible of at least $1,250 for individual coverage or $2,500 for family coverage, plus meets a few other requirements, then you can make tax-deductible contributions to an HSA in 2014.

• Make the most of new FSA rules-employers now have the option to let employees carry over up to $500 remaining in the account from one year to the next. They aren’t required to make the change, but if they do, they can no longer provide a grace period until March 15 to use the money in the account. If your employer still offers this grace period, now is the sweet spot when you can get maximum coverage from your FSA for large, uninsured medical expenses (such as dental work or laser eye surgery).

• Organize and purge your tax files-start gathering your 2013 tax records, so you’ll be ready when tax-filing season begins. Dig up receipts for child-care expenses and summer camp if you qualify for the dependent care credit, and records of investments you sold and contributions you made to charity. You can start to toss some of your financial records you don’t need for tax purposes-such as your monthly brokerage and credit-card statements if they match up with your year-end report. See Financial Files You Can Toss for more information.

• Get more money each paycheck-if you usually get a big tax refund, change your withholding to take home more money every payday instead. Try our Tax Withholding Calculator to estimate how many additional allowance you can take, which will reduce your tax withholding.

• Benefit from self-employed tax breaks-if you were self-employed in 2013, or if you had freelance income, you have until April 15 to contribute tax-deductible money to a simplified employee pension. If you’re self-employed this year, you can start making 2014 contributions now, too.

• Make sure you have health insurance-you’ll have to pay a penalty if you don’t have health insurance in 2014. If you’re still uninsured, you have until March 31, 2014 to buy a policy on a state health insurance exchange without being subject to the penalty.

• Assess the rest of your insurance-it’s a good time of year to review all kinds of insurance, especially if you’ve had any life changes, such as marriage, divorce, a new baby or a new teenage driver, or if you moved or changed jobs. You may need to adjust your insurance to cover your needs, but you may also get a discount if your risk has dropped.

• Do financial housekeeping-start the New Year by reviewing the rest of your finances to reassess your financial priorities and make sure you’re still on track to reach your goals. Build up your emergency fund, rebalance your portfolio, and start a budgeting program if you haven’t already.

 

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