Some people feel that autumn is the "real" start of a new year. Change is in the air as kids start the next school grades and summer indolence gives way to cooler days that just make you want to get things done.
Fall is certainly a great time to take stock of your financial situation. We have a few months left in the calendar year to take action, along with some real incentives to do so -- incentives like expiring tax breaks, open enrollment season and the coming financial juggernaut of the holidays.
Here's how to get started with a fall cleanup:
Do a "spending autopsy." This is what Jeff Yeager, the author of "Don't Throw That Away!," calls periodic reviews of his household spending. You don't have to devote days to this effort: Online tools such as Mint.com and Adaptu allow you to see all your financial accounts in one place and quickly review what you're spending where. These sites automatically categorize your transactions so you can spot trends and create budgets.
Or you can do it the old-school way, adding up spending by category using bank and credit card statements. Review the past three months or so to spot your "leaks" -- areas where you may be spending too much, unnecessary fees and even bogus charges ($1.99 a month for a cellphone horoscope service? Really?).
Liz Weston
You also should take a look at your health care spending in preparation for open enrollment at work. (You'll probably want to review your spending since the start of the year in this category; your insurance "explanation of benefits" forms also can help you track your out-of-pocket expenses.) This information can help you pick a health insurance plan for next year and figure out how much to put in your company's flexible spending plan, if offered. (If you don't have access to health insurance, read "Survival guide for the uninsured." If you've already cut spending and still can't make ends meet, read "How not to pay your bills.")
- Calculator: Am I saving enough?
Audit yourself. A whole slew of tax breaks are scheduled to expire Dec. 31. The highest income tax rate is set to go from 35% to 39.5%; the long-term capital gains rate would rise from 15% to 20%; the child tax credit would becut in half, and more people would be subject to the notorious Alternative Minimum Tax. The estate tax and lifetime gift tax exemptions would fall from $5.12 million to $1 million.
It's uncertain whether Congress will get its act together enough to prevent the so-called "fiscal cliff" of disappearing tax breaks and mandatory spending cuts. All this uncertainty makes tax planning hard. Should you look for extra deductions now, or push them off to next year when tax rates may be higher? Should you sell investments to take advantage of today's lower capital gains rate? Should wealthy families shovel money out of their estates with gifts to their kids?
If any of these matters are concerns, or you own a small business, you should be making an appointment now with your tax professional to discuss your options.
Otherwise, consider tweaking your withholding before the end of the year. MSN Money's withholding calculator can help you fine-tune the number so you don't wind up owing money or getting a huge tax refund (which, as you know, is giving Uncle Sam interest-free use of your money). Since your paycheck is set to be 2% smaller in January anyway -- the Social Security payroll tax holiday is expiring, and there's little interest in Congress in extending it -- you should consider reducing your withholding then, if not before, to offset that reduction in pay.
Embrace entropy. The changing color of the leaves is a signal that winter's on its way. The foliage can be a good reminder that our own winter, old age, is on its way too.
How much you save now can have a direct impact on how comfortably you'll get through that winter. If you're eligible for a 401k or 403b and not contributing at least enough to get the full company match, you should be. Use MSN Money's retirement calculator to see how much you ideally should be contributing in total, and then boost your contribution by 1% or 2% a year until you're there.
If you're 50 or older, you can contribute an extra $1,000 to an IRA or a Roth, on top of the $5,000 younger folks are allowed to contribute. You can contribute an additional $5,500 to your 401k, for a maximum of $22,500.
Not sure how to invest? Target-date retirement funds aren't perfect, but they're better for novices than guesswork (which is how many people allocate their funds).
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