With all the extra spending on gifts and travel during the holidays, the end of the year can be a tough time to feel like you’ve made positive financial growth. A recent Gallup poll shows that the average American family plans to spend more than $800 on Christmas gifts alone, not to mention the extra travel, parties and year-end chores that need to be done.
So what can you do before the year comes to a close to make sure you end on a high note financially? Here are four steps to consider:
1. Avoid consumer debt.
If the average family is spending $800 this year, that means that 50% of us are spending more than that. Gifts are wonderful and a great way to celebrate the season, but don’t put yourself into debt just to give a few extra gifts. If you have a large family, consider discussing spending limits or swapping names for gifts. Or have a family activity and give fewer gifts. Whatever the solution is for you, it’s most important to not spend more than you have. Starting 2016 with a load of new credit card debt is akin to starting a road trip with a flat tire. You’re behind before you’ve even started!
2. Delay cashing that bonus check — for now.
The end of the year is the most popular time for employers to hand out bonus checks. Whether it’s expected or a pleasant surprise, take a moment to think through your options before you cash it for some extra holiday fun. Have you contributed to an IRA this year? What about your savings? Do you have a well-funded emergency fund? Do you have credit card debt you could pay off? While these suggestions aren’t the most fun way to spend your hard-earned money, they are excellent ways to help you be more successful in the future.
3. Start thinking about your taxes.
While it’s easy to put off thinking about your 2015 taxes until early April of 2016 (or for some, April 14), you may miss out on ways to lower your taxable income. Take the opportunity now to start looking at what you’ll owe or get back next year. Tax preparers such as TurboTax and H&R Block have online calculators to help you estimate your 2015 tax liability. If you use a professional tax preparer such as a certified public accountant or enrolled agent, talk to him or her first. You can discuss several ideas for lowering your taxes, such as giving to your favorite charity or talking to your employer about deferring bonuses or other income until next year. If you’re an active investor, you may also want to consider harvesting losses you incurred in 2015 as another way to cut your tax bill.
4. Review your budget and plan for 2016.
The best financial minds are always thinking about the short-term, but only about how it affects the long-term. Financial decisions you make today can and will affect your financial future. Start thinking about expenses you’ll have in 2016. How much will you be able to save toward retirement and other goals? Look back at your budget and expenses for 2015. Where did you do really well and where did you do not so well? Did you have a lot of unexpected expenses? How could you have better prepared for those (hint: your emergency fund)? Most importantly, think about the changes you expect for 2016.
There’s not much time left before the end of the year, but tackling these four aspects of your financial situation will get you on your way to a strong finish in 2015 — and a great start in 2016. Good luck!
This article first appeared at NerdWallet.