Take stock of finances as the year winds down

This time of year is most commonly associated with ghouls and goblins, and then turkey and cranberries. But it’s also an appropriate period to take stock of your finances. It’s an opportunity to act on year-end tax tips, review your investment portfolio, make sure your workplace benefits are in order and put into place better money habits that you can carry into the new year. Here are some suggestions:

Tune up on taxes. It’s smart to keep an eye on tax planning throughout the year. The last two months are especially crucial, as you’re now running low on time for implementing money-saving strategies.

There haven’t been many notable changes to the federal tax code this year, so the usual year-end suggestions apply. These include taking actions to qualify for deductions (if you itemize), delaying income until next year if you can and putting money into tax-sheltered retirement accounts. It also might be opportune to harvest losses on stocks or other investments that can be used to offset

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capital gains or ordinary income. If you think you might face a tax bill next April, consider making estimated payments or bumping up your paycheck withholding.

At the state level, Arizonans can take advantage of credits that offer dollarfor-dollar reductions in tax liability. Most require residents to take some type of action. For example, people who donate to charities, pay for public-school extracurricular activities or contribute to private-school tuition organizations can take credits tied to those activities.

There’s also a credit worth up to $400 if you donate to a state program that assists the families of military personnel. Called the Military Family Relief Fund, it’s run by the Arizona Department of Veterans’ Services. One unusual feature is that this tax credit ends when statewide donations reach $1 million each year. The fund has raised about $250,000 so far in 2014.

Although there haven’t been many income-tax changes in Arizona lately, things could get interesting. Doug Ducey, the Republican candidate for governor, has proposed abolishing the state’s income tax or moving to a lower-tax system. If state income taxes were to disappear, so would the many deductions and credits tied to it, along with various tax strategies.

Optimize workplace benefits. The open-enrollment season offers a good opportunity to review employer-provid-

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ed benefits and make changes, if necessary. Health insurance is the key benefit for most people who have it, and costs have been rising. Yet some surveys have shown that participants usually stick with their status-quo coverage. At a minimum, find out how your coverage is projected to change, including costs.

Also, review your 401(k) or other employer-sponsored retirement program. Find out if your mutual funds or other investments carry reasonable fees. Your company probably has provided information on this, so look it up or research your funds at sites such as morningstar.com. Take a look at your investment allocation to get a feel for whether you have a suitable mix of stocks, bonds and cash.

Try to contribute a bit more to the 401(k) plan. Sock away at least enough to take full advantage of employer matching funds, if available. Charles Schwab recommends raising your 401(k) contributions by 1 percent each year, and more if you receive a pay hike or bonus.

If you have a stake in the stock market, either through a 401(k) plan or other investments, the past few weeks have provided a good glimpse of the downward volatility, or potential pain, that your portfolio faces. If you worried a lot about falling stock prices, it might be time to pare back on your holdings in stocks and stock funds. But it also could be an opportunity to become more aggressive.

Start saving more. Americans routinely list saving more money as a top New Year’s resolution, often right up there with losing weight. But why wait until Jan. 1 to start? Spend the next two months getting into the habit of putting

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away more cash if this is a goal. That way, you’ll have momentum when the ball drops in Times Square.

Despite the improving economy, many people are still cutting things close. About two in five adults say they’d be hard-pressed to come up with $2,000 in a pinch, according to a survey by Finra, the Financial Industry Regulatory Authority. Arizonans are even more cash-strapped than Americans generally, reflecting lower personal incomes and a slower pace of economic recovery here.

Saving more requires you to hold the line on certain expenses such as creditcard purchases tied to holiday spending. With the economy gradually improving and consumers growing more optimistic, many people have loosened up on the financial discipline that they practiced during the recession. Consumer debt is rising again, though delinquencies and bankruptcies aren’t yet creeping higher.

Budgeting is essential to saving. Once you have a budget in place and can track where your money goes, it comes down to deciding which expenses you can’t do without and which ones you can. One key is to build up enough of a cash cushion that you can handle emergencies as they arise.

Yet 42 percent of 500 metro-Phoenix residents said they don’t keep track of monthly expenses, in a poll released this month by Country Financial. That might explain why 67 percent of Valley respondents rate their financial security as no better than “fair.”