A new year is a fresh start — and the perfect time to get your finances in shape. Learning from common money mistakes can put you on the right track and help you make smarter choices all year long.
Money Mistakes To Avoid
You don’t need to wait for January 1 to start your New Year’s money resolutions. Start with your holiday finances and keep going strong by avoiding these nine money missteps.
- Underestimating Holiday Spending
- Delaying Important Financial Decisions
- Not Reviewing Investments
- Overlooking Charitable Giving
- Ignoring Estate Planning
- Not Updating Beneficiaries
- Neglecting Tax-Advantaged Accounts
- Ignoring Year-End Bonus Planning
- Focusing Only on Immediate Concerns
Too many spenders fail to plan for gifts, decorations, and other seasonal purchases, only to end up in unnecessary debt. Set a budget in advance and stick to that limit.
An annual review of your accounts can help you keep your expenses under control. Begin by reviewing your insurance policies to check for excess coverage. Shop around for quotes to ensure you aren’t overpaying.
If you have any outstanding loans, consider refinancing. A better interest rate can mean substantial savings.
Don’t let the chaos of the holidays distract you from your long-term strategies. Year-end is an ideal time to rebalance your portfolio and make changes to reflect updated goals.
If you have investment gains or losses, check their tax implications. Make an appointment with a financial advisor to ensure you’re handling those obligations correctly.
Donations to non-profits can be tax-deductible. If New Year’s Day rolls around and you’ve forgotten to make your contributions, you could miss out on tax benefits. Schedule those donations well in advance of December 31.
Holidays mean family and friends for many people, and these connections can change over time. Make time every year to review your estate planning documents, such as wills and trusts, to ensure they reflect your current wishes. The holiday season is the perfect time for this crucial check-in.
Wills and trusts aren’t the only accounts with beneficiaries. Unfortunately, many people fail to check the designations on their life insurance policies, annuities, and retirement accounts. Include those in your annual estate review to avoid conflicts later.
Retirement and Health Savings Accounts often have annual contribution maximums. Don’t miss the chance to hit these limits and get the tax benefits.
Don’t treat your annual bonus like “free money.” If you use it to pay down debt or boost your savings, you’ll increase the value of that money you worked hard to earn.
Holiday obligations can feel pressing, but don’t let them take priority over your long-term goals. Spend from your disposable income only.
Review Your Finances Before Year-End
These tips and tricks can give you a running start as you head toward the new year. Take the list one step at a time, thinking of it as a holiday gift to your future self. You’ll thank yourself in January — and February, March, April, and beyond.
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