Please enable JavaScript to view the comments powered by Disqus.

Ask Kim

8 Valuable Personal Finance Lessons From 2014

We reviewed your questions—and our answers—to come up with the most timely financial advice of the past year.

Thinkstock

I love working on this column because I get to hear directly from so many readers about their most important financial issues. Here are some of the biggest lessons I learned from helping you in 2014. Thanks for another year of great questions!

See Also: Urban Myths of Personal Finance

1. Everyone had to adapt to health care changes.

The big news continued to be the new health care law, as people signed up for coverage on the Obamacare exchanges in the first few months of the year and started to use their policies in 2014. But no matter where people got their insurance—on the state exchanges, directly from an insurance company or agent, or through their employer—they had some of the same surprises when they used their policies: shrinking networks of doctors and hospitals, more hurdles to clear before their prescription drugs were covered, higher deductibles to pay before coverage kicked in, and unexpected charges for “free” preventive care.

Many found that policies that seemed to be the best deal when they were comparing premiums often ended up costing more by the end of the year if their doctors weren't covered in the plan's network, they had big out-of-pocket costs for medications or they had to pay a high deductible before getting coverage. See What to Expect From Your Health Insurance in 2015 about how to deal with these changes as you use your policy.

If you haven't picked a policy for 2015, you still have time—open enrollment continues for 2015 plans until February 15. See 6 Ways to Make the Most of Obamacare Open Enrollment for 2015. And if you decide the policy you chose wasn't the best choice after all, see Buying Health Insurance in the Off-Season.

2. A health savings account helps take the sting out of rising deductibles.

More people now have a high-deductible health insurance policy—whether to save money on premiums or because it's the only option their employer offered. With most high-deductible policies, you qualify for a health savings account. An HSA provides a triple tax break: Contributions are tax-deductible (or pretax if through their employer), the money in the account grows tax-deferred, and the funds can be used tax-free for medical expenses in any year. I received a lot of questions about the nuances of HSA rules, such as who qualifies to make contributions, especially if you had a high-deductible health insurance policy for only part of the year, and how to switch to an HSA administrator with lower fees and better investing choices. Also see Reporting HSA Contributions on Your Tax Return for details about the tax benefits.

Advertisement

3. A new rule makes flexible spending accounts more attractive.

If you don't have a high-deductible health insurance policy, you can still stretch your health care dollars with a flexible spending account if your employer offers one. Contributions to an FSA are pretax, and you can use the money tax-free for medical expenses. And under a new rule, employers can now let you roll over $500 in the account from one year to the next. See New Rules for (Some) Flexible Spending Accounts and Navigating New Rules for Flexible Spending Accounts. And see Spending Down Your 2014 Flexible Spending Account for strategies to help use the money when you finally reach the deadline.

4. You still have plenty of strategies to save on health care costs under Medicare.

The new health care law applies to pre-Medicare policies, but that doesn't mean it suddenly becomes easier to navigate your coverage as soon as you turn age 65 and sign up for Medicare. I received a lot of questions from readers about making the most of Medicare, lowering the costs, and options for filling the gaps. See What You'll Pay for Medicare in 2015 and How to Avoid the Medicare High-Income Surcharge. Also see How the Medicare Part D Doughnut Hole Works and 5 Ways to Reduce Retiree Health Costs. And read Change Your Medicare Coverage During Open Enrollment for more information about the rules for switching Medicare Advantage or Part D plans during the year.

5. You can squeeze extra tax benefits from your retirement savings.

The rules for retirement-savings plans didn't change much in 2014, other than adjusting some contribution and income limits for inflation. But some readers wanted to take their savings to the next level, and they asked how they could squeeze a bit more out of their options. See When to Start Making Catch-Up Retirement Contributions to read about boosting your contributions anytime in the year you turn age 50, as well as What Roth Owners Should Do If They Exceed the Income Limits. Also see The Benefits of a Roth 401(k) , Often Overlooked Opportunities to Save in a Roth IRA, Tax-Smart Ways to Save for Retirement Without a 401(k) , and Flirting With the Roth IRA Income Limits for a backdoor into a Roth if you earn more than the income limits. For tax-deductible savings opportunities if you're self-employed—or even if you just have some freelance income on the side—see Retirement Plans for Self-Employed Workers, and read Doubling Retirement-Savings Plan Contributions for a special opportunity some employees have to take advantage of extra savings options.

I also heard from a lot of readers who wondered how to get help with their retirement-savings plans, especially if they wanted a one-time check-up from a financial planner to make sure they're on track.

Advertisement

6. You'll do a better job of helping your kids and grandkids if you know some key strategies.

While many readers are saving for their own future, they're also making it a priority to help their kids and grandkids get off to a strong financial start. They asked a lot of questions about strategies that would make the biggest impact. See Starting a Roth IRA for a Grandchild to learn about how to build tax-free savings for any child who has income from a job, and Get the Kids Started in Stocks to learn about custodial accounts with low fees and many investing choices. Read Tax Breaks for Generous Grandparents With 529 Plans, Limit the Impact of Grandparent-Owned 529 Plans on Financial Aid, and Good Reasons to Open Separate College Savings Plans for Your Kids for ways to make the most of your college-savings options. Also see Tax-Free Savings for Pre-College Education Expenses.

7. You have a number of ways to help others while helping yourself.

Many readers are doing well financially themselves and want to help others, and they asked a lot of questions about strategies that can help a charity benefit from their generosity while getting the biggest tax break themselves. See How to Donate Stock to a Charity for the extra tax benefits you can get by giving appreciated stock, and Smarter Ways to Give to Charity for advice on developing a charitable-giving plan early in the year rather than scrambling to give money in December. Also see How to Set Up a Donor-Advised Fund for an easy way to set up a charitable fund that can grow for future generations.

8. Protecting your home can save you a lot of money.

After a nasty winter, many readers wanted to learn about strategies to protect their home from future storms and make sure they have the right homeowners insurance coverage (without paying too much for it). It's not too late to take steps to Protect Your Home From Pricey Winter Problems, as well as start preparing for spring storms. See 12 Ways to Prepare for Storm Season. Taking steps to protect your home can help you avoid filing claims that could lead to homeowners insurance rate hikes in the future—see How Homeowners Insurance Claims Will Boost Your Rates.

Please continue to send your questions to me at askkim@kiplinger.com. I read every question, and even ones I don't answer can provide ideas for future columns and articles—both for myself and for my colleagues at Kiplinger. I look forward to hearing from you in 2015 and learning from your questions.

Got a question? Ask Kim at askkim@kiplinger.com.