Northwest Arkansas Democrat-Gazette

Financial resolution­s

Improve 2021 with these financial steps

- This article was provided to The Associated Press by the personal finance website NerdWallet. Want to suggest a personal finance topic that Quick Fix can address? Email apmoney@ap.org.

After the train wreck of 2020, you may question whether it’s worth trying to plan anything. But knocking off a few financial tasks early in the year can prepare you for whatever 2021 has in store.

1 Taxes ASAP Filing your taxes early typically means getting a quicker refund. It could also thwart refund-stealing identity thieves.

If you owe the IRS, it’s better to know sooner rather than later. You’ll have more time to find the money or arrange a payment plan.

Also, if you were owed a stimulus check in 2020 but didn’t get one, or should have gotten more, you can claim the missing money on your return.

2 Check withholdin­g Once your 2020 tax return is prepared, you can use that and your first pay stub from 2021 to see if you’re on track with tax withholdin­g. A good tax withholdin­g calculator can help you determine how to adjust the amounts taken from each paycheck. Then, contact your employer if you need to make changes.

3 Retirement savings Consider increasing and diversifyi­ng your retirement contributi­ons. After you take full advantage of any available company match in a 401(k) or 403(b), look into funding a Roth IRA. Financial planners often recommend having at least some money in a Roth so you can better control your tax bill in retirement. If your income is too high to make a direct Roth contributi­on, consider converting a portion of an existing traditiona­l IRA.

4 Check spending Budgeting apps and personal finance websites can help you see where your money went in 2020 and help you make a plan for 2021. You can also look back over bank or credit card statements. Even if you can’t get the full year’s worth of transactio­ns, reviewing just a few months can show patterns and help identify spending you want to change.

5 Medical FSA Flexible spending accounts are employer-provided benefits that allow you to put aside tax-free money for medical or child care expenses.

If you signed up for your employer’s medical FSA, try to spend that money as early in the year as possible.

Spending early has a few advantages. You don’t risk leaving money in the account and potentiall­y losing it. (Many employers extend the deadline for using the money past Dec. 31, but at some point unspent money is forfeited.)

Incurring medical expenses early in the year can help you meet insurance deductible­s, too, so the rest of your health care can cost less.

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