Last-Minute Money Moves to Make Before You Ring in the New Year
Lazetta and others share their strategies to improve your financial outlook with CNBC's Michelle Fox
The year is almost over. Yet you still have time to make some financial moves and set the stage for a fresh start in 2021.
While there are timely tax savings to consider, it’s also a good time to assess your budget and other money matters.
“We, as human beings, tend to want to wrap things up in a nice neat little bow at the end of the year to get a good start in the new year,” said certified financial planner Douglas Boneparth, president of New York-based Bone Fide Wealth and member of the CNBC Financial Advisor Council.
Here are eight strategies that can improve your financial outlook before you say, “Happy New Year.”
1. Prepare for bills to restart
This year was unlike any other.
You may have lost your job or saw your income reduced. You also may have gotten some breaks thanks to the CARES Act, such as the student loan forbearance or a penalty-free withdrawal from your 401(k) or individual retirement account.
However, you’ll have to soon start paying off your student debt again. The relief wasn’t taken up again in the latest stimulus bill and expires on Jan. 31.
“If you have been spending that money that used to go to your student loans, you’re going to have to get a handle on that,” said CFP Lazetta Rainey Braxton, New York-based co-founder and co-CEO of advisory firm 2050 Wealth Partners.
“If you’ve been saving that money, good for you,” she added. “You’ve taken advantage of that relief, and then you will resume back in February.”
Those who took money out of their retirement plan have three years to pay it back without owing taxes on it, if they so choose. They can also take it as a withdrawal, and have three years to pay taxes on it.
If you plan on paying it back, you’ll have to add that into your budget. If not, plan on paying a third of the taxes on it come tax time.