Preparing your finances for the new year

AUSTIN (KXAN) — The new year is the perfect time to make sure your finances are in order and possibly be generous too.

According to non-profit “Charity Navigator,” 12 percent of annual giving happens in the last three days of the year.

We spoke with Mickey Powell of Powell Financial Partners on how to be wise with your money heading into 2016.

What can we do to prepare?

This is a great time to focus on your personal planning. First of all, charitable giving is very important this time of year, because you can get a tax break if you donate on or before December 31. Remember, if you want to claim a tax deduction you must itemize. Also, the charities must be qualified by the IRS, and you must have proof of your gift. Some people also choose to sell off losing stocks this time of year to offset their tax burdens.

What about organizing your personal finances?

One of your top New Year’s resolutions should be to make sure your financial house is in order. A big part of that is communicating with your family members of all generations and making sure everyone is on the same page.

Many of our clients want to establish an enduring legacy and that means talking through big financial decisions before a crisis happens. Do you have a will? Is it signed? Have you told the necessary people in your family and explained your decisions to them? Is your beneficiary information correct on your retirement, savings, and life insurance accounts? Studies show that 70% of inherited wealth is lost by the next generation and 90% is gone by the generation after that. That’s why family meetings are important to sit down face-to-face and talk about family values and how your money should be spent.

The new year also seems like a good time to work on a budget and set financial goals?

It’s helpful to map out your 2016 goals and plan how you’re going to get there. This can vary depending on your life circumstance. For someone just starting a career it can mean paying off student loan debt or building an emergency fund, for a young family it can mean buying life insurance for the first time, for a middle aged worker it can mean contributing more to a Roth IRA. Whatever your goal is, write it down and keep it where you can see it everyday and stay motivated. And as you work on a new budget for 2016, analyze which areas you came up short this year and work to do better.

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