12 Money Mistakes You Need to Stop Making During the Holidays
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7. Not Rebalancing Your Investment Portfolios
While there is no specific time to rebalance your investment portfolio, the end of the year is ideal. “During the year, your portfolios may have shifted as the result of some assets going up or down more than others,” explains Cici. “Rebalancing them, or bringing the weights of your assets to the original weights based on your financial plan, can help.” This strategy will ensure that you are getting the most out of your investments, and rebalancing stocks and bonds to a 60/40 ratio will enhance your performance moving into the new year.
8. Not Maxing Your Retirement Accounts
The end of the year is a great time to max out your 401(k) or IRA contributions. This is an especially good idea if your plan has a company match percentage. Otherwise, you’ll be saying no to free money.
Cici says, “You could contribute up to $18,000 a year in your 401K. But, if you’re 50 years or older, you could put an additional $6,000,” she says. “Those contributions, which are tax-deductible, will lower your current taxes as well as be invested to grow over time for your retirement.”
9. Forgetting to Sign Up for Health Care for 2018
The holidays are a very busy time. But, make sure you don’t forget to sign up for next year’s health care.
“Many states have their own exchanges where you can apply to get coverage and maybe financial assistance based on your family and income,” says Cici. “Healthcare is continuing to be one of the largest expenses for a family and careful evaluation of the choices, coverages, premiums, copays, and deductibles is an important decision that will matter for the whole year that you have coverage.” You’ll also face tax penalties if you aren’t covered by a health care plan. So, it’s definitely a decision that you shouldn’t forget about.
10. Not Keeping Track of Charitable Donations
If you’ve donated to any charities this year, or are feeling generous this Christmas don’t forget to keep track of your donations. When you donate to any IRS qualified exempt organization, remember to save your receipt. You’ll need it as proof so that you can get an exemption on your taxes.
11. Ignoring the Child and Dependent Care Tax Credit
If your children are on a holiday break for a week or more, you might qualify for the Child and Dependent Care Tax Credit. This tax credit will give you up to $1,050 for your child. Or, up to $2,100 if you have two or more children that you need to send to daycare or a camp while you work.
12. Not Dialing Back Your Withholding
If you think you’ll be getting a tax refund for this year, you should lower your withholding allowances. This will reduce withholding to make the most of next year’s paycheck. Lisa Greene-Lewis, CPA, TurboTax expert says, “If you do this, don’t forget to adjust your withholdings back based on your income in the upcoming year,” she says.
“That depends on your spending habits. If having more money in your paycheck will cause you to over-spend on those peppermint mocha lattes or holiday shopping sprees, you may opt to keep your withholding the same and take your money as a tax refund.”
