Though my days are fairly full right now with cookie baking and holiday movie watching, there’s something else on my mind this time of year: end of the year planning. Can you believe there’s only 14 days left of 2013?
It might feel like a party crash right now, talking about grownup stuff like money, but it’s honestly the best time to think over your plan. If you keep things simple, and if you get help where you need it, it honestly doesn’t need to be a massive headache—you can do smart stuff with your funds, and get back to your merry-making.
Here are the three main things we discuss about our money this time of year.
1. Where do we want to give?
Non-profits need your support more at the end of the year than any other time, and it’s a great time for you to give—tax write-offs to finish the year, and a natural time to embrace giving as a family.
The second half of December, Kyle and I chat about what charities have approached us for an end-of-the-year gift, and we decide where to channel our funds. We usually spread out our giving with smaller gifts for multiple non-profits, though there have been years when we’ve given all our funds to one cause.
We’re not talking tons of cash, of course—we simply have a sinking fund called “giving,” and whatever’s left in there after our automatic monthly giving is emptied for these end of the year gifts. No reason to keep it there, only to be considered taxable income, when we plan on giving it regardless.
2. How do we want to invest?
A little over a year ago, we did a very grownup thing—we met with an investment specialist. We used Dave Ramsey’s ELP program, and I was so glad we did, because we found a great guy who used normal-speak to explain otherwise ridiculously confusing things.
Okay, let’s be honest—a lot of it is still confusing to me, and just about every time Kyle and I sit down to look over our stuff, he has to re-explain what I’m looking at. It pretty much looks like, “Beep boop beep, blah-dee blah blah bloop” to this words-over-numbers girl.Photo source
But here’s the thing I love about our investment guy—he doesn’t mind that he has to re-explain things to me whenever we meet. He knows what I do for a living, and he also really gets what it’s like to work for yourself. When we first sat down with him, he looked over all our previous investments—which were all over the place, from previous employment—and he suggested how to move things around where they need to be (along with advising us on where some things should stay).
We had to move our IRAs, so he helped us do that, and he set me up with a new tax-deferred 401K, which was just what I needed as a self-employed writer. He helped us create a nice mix of taxable and tax-deferred investment options.
If you’re like me, you might be thinking an investment guy is expensive, for people with bags of money to invest (emblazoned with the dollar sign on the front a la Scrooge McDuck). Well, I can tell you he has been worth EVERY penny we give him. Because knowing I have someone on my team, to answer my dumb questions and to give sound advice based on knowing who we are, where we live, and how we work? Priceless. With some of our investments, he gets a percentage; with others, he gets a flat fee. It’s totally reasonable.
So at the end of the year, Kyle and I look over our investments (about four times a year our guy sends us an easy-to-read, streamlined update on how everything’s going), and we decide if we want to channel more funds into one of our tax-deferred investments before the end of the year. If we have any questions, our investment guy is only a phone call or email away.
If you want someone like this in your life, might I suggest looking via the ELP system? It hasn’t steered us wrong yet. (We’ve also used this database for finding our realtor and our insurance guy.)
3. Where do we want to financially be this time next year?
Lastly, Kyle and I talk about where we’d like to be this time next year. I’ve found that vocalizing our financial goals, as far-off and ridiculous as they seem, somehow seems to help us actually reach them.
There’s nothing magical about this discussion, of course, but perhaps it’s the act of communicating that kicks us in gear towards making those dreams more realistic, to brainstorm what it would look actually like on a monthly basis to make them happen.
Some years, those goals have happened in half the time we anticipated. Some years, those goals never happen at all. It’s okay, though. It’s still good to dream and plan.
Now, don’t picture all this financial talk happening over a big white board and yellow legal pads, talking long into the night while our kids sleep. For us, during this hectic time of year, it works best for us to chat while we chop the vegetables, as we drive across town, or perhaps for a few minutes over a beer during date night.
We don’t make a huge deal out of it, in other words. But we’ve learned that for us, it’s irresponsible to just shove money-talk under the rug and hope the need miraculously goes away—we just spent a more-than-usual amount on gifts; the least we could do is talk about how we’re channeling that money towards others and to our future selves.
So yeah—I encourage you to talk about giving, investing, and financial goals sometime in the next two weeks. Your future selves will thank you.
Do you have any end-of-the-year financial plans? What’s the hardest part about investing? The easiest?
This post is sponsored by Dave Ramsey’s Endorsed Local Providers.