I love the Fall – the crispness of the mornings, the first rain, and the changing colors. Some say that California doesn’t really have seasons but pay attention and you’ll see all sorts of differences. As a hiker, cyclist, gardener and beekeeper, I’m acutely aware of the changes in the natural world this month. My last harvest of honey was over a month ago now, the hens are laying fewer eggs and the trees are starting to lose their leaves.
As I take my cues from nature, I think of Fall as a time of letting go – getting rid of the non-essentials so one can get ready for the relative quiet of winter. How does this relate to financial wellness? In a couple of ways:
Charitable Giving: I’m not suggesting that you “let go” of all your money but I believe charitable giving is an important part of financial wellness. Some are in a better position than others to contribute to their favorite causes – whether it’s your place of worship, an organization that supports social justice, the environment, or your local school. The Fall is a great time to think about your values and what organizations you would like to support. Many people wait until the last minute in December to contribute to charities. Since the holidays can be so busy anyway, I recommend thinking it through and acting earlier.
The new TCJA (Tax Cut and Jobs Act) has implications for charitable giving. Since the standard deduction has roughly doubled, many fewer tax filers will be itemizing their deductions and therefore won’t be able to take advantage of the deduction when giving to charities. One option is to “bunch” your charitable donations into one year – giving what you might in the next 4-5 years but doing it all in one year if it changes your ability to itemize. My wife and I have a “donor advised fund” (DAF) which allowed us to take a deduction for charitable contributions in one year and then spread out the giving over the next several years. There are other advantages to DAFs, especially if you own stock that has appreciated in value.
Fall Cleaning:De-cluttering and pairing down to the essentials have been in the news a lot lately. I find that getting rid of stuff I don’t need feels very liberating, leaving more time and energy for the things I care about. A couple of possibilities for your financial life:
- Do you still have receipts and records from a decade ago? Maybe it’s time to look through your file cabinet and get rid of those non-essential documents. There are some records, like tax returns, you’ll want to keep around for a few years but many others can be discarded. If you do clean out your files, I recommend shredding anything that has account numbers or personal data for security reasons.
- Ideally your financial life is simple but you may have lots of accounts of different types. Closing unused accounts, consolidating similar types of accounts or simplifying in other ways will ease your ability to manage your finances.
Taxes: Fall is also a time to think about taxes. Yes, I know everyone wants to ignore taxes until the last possible moment but especially with the new TCJA, understanding how the changes will affect you is important. Better to start now than next April.