Almost everyone spends the holiday season going over their goals and dreams for the New Year. Getting “financially fit” falls very high on the list of resolutions. But what if I told you that it was just as important to focus on your financial health in December? December can be crazy as everyone is generally rocking around the Christmas tree and spending too much money. But the actions you take in the last month of the year can be very impactful for many reasons. Here are some things you should focus on before year-end:

1. Don’t forget to give yourself a raise.

Chances are, you received a slight pay raise this year. If you can, boost your retirement savings rate before December 31.

If you simply stay the course and fail to raise your contribution rate periodically, you’re leaving money on the table. That’s because over time, being an aggressive saver and mediocre investor beats being a good investor with just average saving habits.

Case in point: A 35-year-old making $75,000 a year, putting 7% of pay in a retirement fund and earning a better-than-average 10% annual return would have nearly $1.2 million after 30 years. That same worker who socks away the recommended 15% of pay while earning more-typical 7% annual gains winds up with $1.4 million. “Your goal should be maxing out your retirement contributions. If you can’t do it all at once, adjust your savings rate gradually over time,” says Jan Blakeley Holman, director of adviser education at Thornburg Investment Management.

2. Check your gains & losses in your investment account 

If your portfolio has some investments that lost money this year, think about selling them before December 31. Doing that will help reduce the tax bill for any gains you’ve enjoyed throughout the year. But don’t let the tax situation alone guide your decision. If an investment still makes sense for your portfolio even though it’s lost some ground, hold on to it.

3. Manage your income & deductions

If you are a business owner, this is crucial to do before year-end. Also, if you are at or near the next tax bracket, you should also pay close attention to anything that might bump you up.

• If you think you are in the danger zone of getting bumped to a higher tax bracket, consider making a charitable donation.
• Determine if you should accelerate deductions or defer income, potentially allowing you to minimize your current tax liability. Sometimes your employer will allow you to defer bonuses to the New Year. Also, if you are a business owner and are expecting a payment, perhaps see if it can be paid in the New Year. Check with your accountant!

4. Make a charitable contribution

Charitable giving is good for the soul and for tax mitigation. Make sure to officially make your donation before December 31 for it to count towards your 2018 tax year. There are many different giving strategies that you can implement such as giving good old-fashioned cash (or check) or donating used items, goods and clothing to your preferred charitable foundation.

5. Evaluate your life

Making sure to evaluate any life changes from the past year or the upcoming year is an important part of financial planning. Moving to a new house, getting married or divorced, having a child, changing jobs or retiring are all important life changes. If you think that you have had a material life change that could impact your financial life, it could be a good time to talk to your financial advisor. In general, if you think life is getting too financially complicated to handle on your own, it may be time to hire someone to help you. Perhaps that could be your new year’s resolution!

Source: Forbes