Snow Days Are Ideal Time to Get Finances in Order

Many of us have spent a lot of time indoors this past week due to the weather. And if we believe the weather men and women, it looks like we could have more bitterly cold temperatures and wintry precipitation over the next few weeks. Are you twiddling your thumbs or making good use of all this downtime? Being snowbound inside warm homes is a great time to inspect financial houses — and ward off cabin fever. Here are four financial things that all of us could be doing on a snowy day.

Income taxes

There have been a lot of envelopes arriving in the mail marked “Important Tax Information.” Now is the time to gather those up for your tax preparer. Plan to finish your taxes well ahead of the April 15 deadline. If you owe taxes, go ahead and file the return and pay the amount due. Since most deposit accounts are paying practically zero interest on cash balances, there is very little reason this year to wait until April 15 to file your return. If you are receiving an income tax refund, have a plan for those funds. Consider applying 75 percent of the refund to your top financial priorities. Have you built a cash reserve equal to six months of living expenses, for instance?

IRA contributions

Spousal IRAs are great investment tools for spouses who do not work outside the home and such an account will likely reduce the amount of income tax your family owes to the IRS. Non-working spouses can make a deductible contribution to an IRA of up to $5,500 for 2015 ($6,500 if you are age 50 or older this year) as long as you file a joint tax return and the working spouse earned enough income to cover the contribution. For 2015, the deductibility of the contribution is phased out for couples with adjusted gross income between $183,000 and $193,000, provided that the working spouse is covered by a qualified retirement plan.

Did you make your IRA (of any kind) contribution for 2014? If not, you still have time! The IRS allows you to make contributions for the previous year up until the normal federal tax deadline, April 15. The same rule applies to establishing an IRA. If you didn’t have an IRA last year, it’s not too late. You can open the account and make a contribution for 2014 before April 15.

Home inventory

Do you have a home inventory? This is a comprehensive report, including detailed descriptions and photos, of personal property in and around your home. Should your property ever be damaged or stolen, you’ll need such documentation for the insurance claim. Take time to itemize your belongings, particularly valuable ones, providing purchase date, cost, receipts if you have them, model, serial number and estimated or appraised replacement value. Take pictures or use a video camera and store these pictures along with your other important documents in a fireproof and waterproof safe or in your safe deposit box at the bank. Besides insurance purposes, this is a smart thing to do for estate and financial planning, too.

Summer planning

Do the dreary days and plummeting temperatures have you daydreaming about summer? While you’re taking advantage of the inside time to plan this summer’s outside time, consider some ways to advance your child’s financial as well as recreational education. Have your children participate in the deliberations: how to best spend the budget for camps, vacations, weekly allowances, etc. If your children want to do more than your budget allows, the decision process can be a great learning exercise about needs, wants, prioritization and the scarcity of funds. Remember, throughout most of their lives, our children will be making allocation decisions concerning their own money. The sooner they start practicing this exercise, the stronger their monetary muscles will be!

Taking the time to do these financial tasks isn’t as tempting as snow sledding or snuggling up on the couch for a good movie, but you’ll be probably be quite pleased with yourself when you’re done, knowing your financial house is in better order!

Phoebe Venable, chartered financial analyst, is President & COO of CapWealth Advisors LLC. Her column on women, families and building wealth appears each Saturday in The Tennessean.