End-of-Year Finance Mistakes to Avoid

Blog posted On December 25, 2019

It’s easy to get swept up in the excitement of the holiday season and make some year-end financial mistakes.  If you fail to pay attention to your finances now, it could cost you next year. Taking some time to review your finances before the end of the year can help you cut excess spending and take advantage of all opportunities to save.  

Here are six ways to save:

Audit Subscriptions – subscription-based services are easy to set up, and unfortunately, easy to forget.  Some subscriptions, like meal plan and beauty services, you may use regularly.  While other subscriptions, like excessive streaming platforms or a clothing rental company, you may not use so frequently.  Look at your credit card and bank statements from the past three months.  Are there any subscriptions you can cut?  When you sign up for a free trial of a service, make sure you’re actually going to use it before you start paying for it.  Cutting a $10/Month subscription saves you $120 per year, cutting 5 $10/Month subscriptions saves you $600 per year.  It’s worth a check!

Take Advantage of Credit Card Rewards – when you’re doing your holiday shopping you may be asked to sign up for a store credit card or receive credit card offers in the mail.  Many credit card companies offer welcome bonuses or other incentives to sign up for a card during the holiday season.  If you take care of your credit and are not interested in applying for a loan or other line of credit anytime soon, this may be a good opportunity to sign up for a new credit card. 

Use Up Your FSA Account – if you use a flexible spending account (FSA) to supplement your health insurance, your money typically does not roll over from year-to-year, unless you have a rollover or deferral provision.  If you don’t have any upcoming medical expenses, you can use that money to stock up on health-related items like sunscreen, first-aid items, or new contacts.  You may also want to consider having an eye exam or dental exam.      

Max out 401(k) Contributions – many companies match employee 401(k) up to a certain percentage.  If you’re not maxing out your company’s 401(k) match, you’re basically losing free money.  For the 2019 tax year, the maximum contribution to a 401(k) account for workers under the age of 50 is $19,000 and for workers over 50 the maximum contribution is a total of $25,000.  

Organize Tax Documents – employers won’t give out W-2 or 1099 forms until January, but you can still get other important documents together ahead of time.  Check out your tax returns from the last few years and gather supporting documents.

Plan Ahead – look ahead to any expenses you have coming up next year.  Will you be buying a house?  Are your children starting college?  Do you have any travel plans?  Set aside any year-end bonuses or extra cash now so you can fund other expenses later in the year. 

Enjoy yourself this holiday season, and in the upcoming year, when you take some time to review your finances and plan ahead. 

Sources: CNBC