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Money can be earned before the end of 2020 | Blog

As we approach the end of a truly unsurpassed year, it's time to reflect on how 2020 has affected our lives, our families and our finances. Some people may have been able to save a little extra money this year thanks to the ways in which social distancing and safer home policies have reshaped our spending habits. (Fewer dinners, fewer miles logged in the car.) Other people, especially those of us affected by furloughs and unemployment, may have experienced more financial strain.

Anyway, it's a good idea to ask yourself if there is any money you need to make before the end of 2020, either for short-term tax benefits or long-term savings planning (or both, or something completely different). To get the best possible financial advice, we ask the same question to four of our favorite financial experts. Specifically, we wondered: Should you focus on maximizing your pension contributions before the end of the year? Is it time to examine the harvest for tax loss? How about setting aside money for your children's education or helping your family prepare for an uncertain future?

Here are some expert tips to help you make smart financial decisions ̵

1; and to start thinking about the financial goals you may want to work towards in 2021.

In this article:

Check out your finances [19659006] Before you start making any movements at the end of the year, start by checking out your finances – and yourself. Have you made smart financial choices in 2020?

"For the turn of the year, take a look at your financial situation," suggests Betty Wang, CFP® and founder and president of BW Financial Planning. “How is your finances? How do you feel about your financial future and your long-term goals? Are you on the right track? Or did 2020 throw some wrenches into your financial plan? "

If your financial goals for 2020 were a bit derailed, do not be so hard on yourself – it has been a difficult year for many people, whether you were dealing with furloughs, unemployment, illness or natural disasters. We have all been very stressed and it definitely affects how we handle our money.

If you wish, you can use this check-in process to ask yourself how you handled the stresses of an unprecedented year. Have you reduced important purchases, or did you invest in everyday amenities to help your household flourish under quarantine? Did you find that you incurred more impulse expenses, and that any of those expenses ended up being more than you could afford and led to debt?

Do not overdo your previous actions. Just ask yourself how you feel about your financial decisions in 2020 and if you have learned anything about yourself that could change the way you handle money in 2021.

Then take a few minutes to see where your bank accounts, credit card balance and investment balance are. present – and ask yourself how much money you can realistically add to any outstanding 2020 financial goals.

Maximize your pension accounts

If you have a little extra money in your bank accounts you might want to transfer some of the money to your pension accounts. Maximizing your retirement contributions each year is one of the smartest things you can do – and even if you can defer some of these contributions to 2021, some types of accounts have a slightly earlier deadline.

As Mary Beth Storjohann, CFP ® and founder of Workable Wealth, explains: “You only have until December 31st to maximize your occupational retirement accounts as a 401 (k) or your health-saving account. If there is a little extra leeway in your annual budget, now is the time to make it happen.

If you have an IRA or a Roth IRA, you have until the 2020 tax filing deadline to maximize your annual contributions – which means you can defer any of your IRA contributions from 2020 to 2021. This may be your best option if you do not have much extra money right now. With that said, delays can easily turn into passivity – which is why Sam Dogen, aka Financial Samurai, recommends making as many IRA grants as possible before 2020 ends: “You might as well get your grants out of the way within the calendar year and start fresh. .

Save for your children's education

If you still have money to allocate after maximizing your pension accounts, Dogen suggests that you add it to your children's education: “If you have children, I recommend that you contribute up to $ 15,000, the maximum annual gift tax closing amount, in a 529 plan.

Helping your children afford a college education is a way to create generational wealth – but if you can not afford to contribute to a 529 plan this year, do not worry. You can still transfer wealth to your children by sharing your own skills and talents, working with them as they deal with the challenges of distance learning and supporting your children's goals and dreams.

Remember that only certain types of education cost money – so in addition to asking yourself how much you can contribute to your children's college fund, ask yourself what you can do to help your children navigate an increasingly complex world.

Buy Life Insurance

On the topic of generational wealth: If you have not already signed up for an affordable life insurance plan, you may want to add "get life insurance" to your list of money moves to make before the end of. As Lynnette Khalfani-Cox, CEO of financial education firm The Money Coach and author of Zero Debt: The Ultimate Guide to Financial Freedom, told us when we interviewed her about the importance of building the wealth of the generation: “Life insurance is one of the easiest, uncomplicated ways to help pass on wealth to the next generation. ”

Financial S amurai agrees: “Absolutely get life insurance if you have relatives. If there is one thing the pandemic has taught us, it is that tomorrow is not guaranteed! Protect your loved ones at all costs.

Start by getting a free life insurance quote or by using Haven Life's life insurance calculator to determine how much coverage you may need. Then apply for a life insurance policy – getting affordable life insurance is one of the quickest and easiest things you can do to improve your family's long-term financial situation.

And if you already have life insurance but your situation has changed. – maybe you have been promoted at work or if your family has grown – you can consider getting additional life insurance to cover your extra salary and / or your needs.

Look at the tax loss harvest

If you have an investment portfolio, it's time to see how the market treated you in 2020 – and time to ask yourself if harvest loss can help you reduce your tax burden in 2020 If your investment portfolio is with a robo advisors like Wealthfront, the service can automatically handle the tax loss for you; otherwise you may need to do it yourself.

"Check out your portfolio and evaluate its results", says Storjohann. “The market had some volatility this year, so you may have won or lost money. Depending on your situation, discuss with your tax advisor or financial advisor and see if it would benefit you to make a tax loss harvest.

Tax Loss Harvesting is one of the best performing financial efforts under the guidance of a professional – but here's a quick review of how tax loss harvesting works, courtesy of Joe Saul-Sehy: “If you have positions that are down this year, You sell them to realize a loss for tax purposes, and then you would buy a similar position immediately. (It can not be the same fund / stock because you would miss depreciation due to the "washing rule" that says you have to stay out of a position for 30 days to write off the loss on your taxes.) Remember that this is only valuable in taxable accounts, not tax-protected accounts such as the IRA.

If this sounds complicated, it's because it is. So even though tax loss harvesting can save money on your taxes, we recommend that you take Storjohann's advice and discuss strategy with a tax advisor or CFP before considering harvest loss.

"If there is one thing that the pandemic has taught us, it is that tomorrow is not guaranteed! Protect your loved ones at all costs.

—Sam Dogen, aka The Financial Samurai

Making Charities

For many people, December is a month to give – and that includes giving to charities, nonprofits, and other organizations that do work that you value.

If you're not sure where to put your charity dollars this year, Haven Life has a guide to the 2020 Charity Distribution. We've researched some of the best COVID-19 relief funds and non-profits working to help people rebuild their lives after natural disasters, as well as organizations working for racial justice in America.

People leaving charitable donations in 2020 can also benefit from a new tax benefit. "By 2020, you can deduct up to $ 300 in charity whether you specify or not because of CARES law," Wang said.

This is what the IRS says: "Previously, charitable contributions could only be deducted if taxpayers specified their deductions. However, taxpayers who do not specify deductions can take a charitable deduction of up to $ 300 for cash contributions made in 2020 to eligible organizations."

CARES The Act also temporarily lifts the limits for charitable contributions – which is one of the reasons why Dogen suggests that wealthy individuals consider increasing their charitable donations in 2020: “If you are really wealthy and have a property that will exceed the current property tax threshold of 11.58 million dollars per person, you might as well start aggressively giving more to your children and charities. ”

That said, tax rules can be complicated, as can different types of charities – so talk to a CPA or tax advisor if you have any questions about how your donations from 2020 can affect your taxes.

Set your 2021 financial goals

There's another amount of money you need to make before the end of 2020 – and that's to start setting your 2021 financial goals.

Saul-Sehy proposes to establish automatic savings plans that will start transferring money to your savings accounts in early 2021. “The easiest way to get on with your money is to automate your savings. Set up automatic transfers to your emergency fund, perhaps to a holiday / holiday fund and to long-term investments.

In addition to setting up automatic savings plans, you can also set up auto payment plans on your monthly bills – including your credit card bills. "I like to have the smallest autopay on my credit card," says Saul-Sehy. "I always try to pay my cards in full every month, but if I accidentally miss a deadline, I will not incur late fees and my credit will not be included."

Wang agrees that saving money should be one of your top financial goals in 2021 – and reminds us that saving money can also help you achieve other financial goals, such as building an emergency fund or setting aside money for travel after a pandemic. .

With this in mind, Wang offers this challenge: “For 2021, challenge yourself to save 1% percent more of your paycheck. Maybe the savings go to your 401 (k), your emergency fund or the dream trip you want to take.

What financial goals do you hope to set by 2021 – and saving a little extra money each month will help you get there? If your finances are so tight that it may be impossible to save another 1% of your paycheck, you may want to focus your 2021 financial goals on finding ways to make more money or end each month with a little extra money.

No matter what financial goal you choose, the simple act of setting your goals will help you focus your financial efforts in the right direction – and help you prepare for what 2021 can bring.

Our Editorial Policy

Haven Life is a customer-centric life insurance agency supported and wholly owned by the Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and general well-being can be refreshingly easy.

Our Editorial Policy

Haven Life is a customer-centric life insurance agency that is supported and wholly owned by the Massachusetts Mutual Life Insurance Company (MassMutual). We believe that navigating life insurance decisions, your personal finances and general well-being can be refreshingly easy.

Our content is created for educational purposes only. Haven Life does not support the companies, products, services or strategies discussed here, but we hope they can make your life a little less difficult if they suit your situation.

Haven Life does not have the right to provide tax, legal or investment advice. This material is not intended to be provided and should not be relied upon for tax, legal or investment advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

Our disclosures

Haven Term is a term Life Insurance Policy (DTC and ICC17DTC in certain states, including NC) issued by Massachusetts Mutual. Life Insurance Company (MassMutual), Springfield, MA 01111-0001 and offered exclusively through Haven Life Insurance Agency, LLC. In NY, Haven Term is DTC-NY 1017. In CA, Haven Term is DTC-CA 042017. Haven Term Simplified is a simplified Life Insurance Policy Issue (ICC19PCM-SI 0819 in certain states, including NC) issued by C.M. Life Insurance Companies, Enfield, CT 06082. Numbers and functions for insurance and equestrian forms may vary by state and may not be available in all states. Our California agency license number is OK71922 and in Arkansas 100139527.

MassMutual is rated by A.M. Best company as A ++ (Superior; top category 15). The rating is from Aril 1, 2020 and may change. MassMutual has received different ratings from other rating companies.

Haven Life Plus (Plus) is the marketing name of the Plus Rider, which is part of the Haven Term policy and offers access to additional services and benefits free of charge or at a discount. The driver is not available in all states and is subject to change at any time. Neither Haven Life nor MassMutual is responsible for the provision of the benefits and services made available under Plus Rider, which are provided by third party providers (partners). For more information about Haven Life Plus, visit: https://havenlife.com/plus.html

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