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Amy Nickson On 26th Dec,17
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9 Financial mistakes you should leave behind in 2017

December is the month when you finish all financial tasks and move forward to the next year with new financial plans and goals.

For example, this is the ultimate time when you should complete making charitable donations if you wish to get a tax deduction.

Paul Tramontozzi, a financial planner in the New York City, has said that you should make charitable donations by December 31 to get tax benefit this year.

End of the year is also the ideal time to make new financial goals.

This is also the ultimate time when you should leave behind all the financial mistakes you have committed throughout the year.

Because financial mistakes are fatal; they will not let you achieve any financial goal. You should move forward with better financial insights.

Here are 9 financial mistakes that you should leave behind and move forward to see a better financial future:

1. Not reviewing your spending behavior

This is the perfect time when you need to review what you have spent throughout the whole year. By doing so, you will understand your bad money decisions.

Needless to say, you will be able to avoid the same in the coming year.

Go through your credit card statements and old bank transaction history to know the areas where you have spent the most.

2. Not formulating a holiday budget

Holiday time is fun but expensive. You should be prepared for the expenses from 2-3 months earlier.

Many retailers or online shopping portals announce their pre-holiday deals or discounts much earlier.

Thus, if you do not have enough money in hand, you will not be able to buy them.

You should formulate a budget including Christmas related expenses.

If you follow this budget, you can easily meet all the expenses without facing money problem.

3. Accumulating excessive credit card debts

Some people accumulate quite a bit of credit card debt during the festive season, which is a fatal blunder.

You shouldn't enter a New Year with credit card debt.

Remember, the first quarter of a year is very vital, you need to prepare yourself for the tax season (April).

Thus, if you have to manage a huge debt, then you will be in serious financial trouble in the new year.

4. Not contributing money to a 529 college savings account

The 529 college savings account plays a vital role in securing your child education. How?

Since education cost is rising fast, you should safeguard yourself from accumulating huge student loan debts to fund your child's education cost.

Contributing money to a 529 college savings account is one of the best ways to build a fund for the future education-related costs.

This account is also tax advantaged in many states.

5. You haven't opened a retirement savings account

I bet most of you took a financial resolution to make a contribution to a retirement savings account last year, which is still undone.

If you are one of them, then you may not be able to secure your retirement days; unfortunately it is a truth.

Many people think that they are too young to start retirement savings.

But they don't know that the earlier they start saving for retirement, the more money they can save.

The reality is, there is no right time and age to start saving for retirement.

Since the lifestyle cost will not be the same when you will retire, you should try to save as much as you can to maintain your current lifestyle in your golden days.

So, if you haven't started contributing to a 401(k), then start as soon as possible. If you are self-employed, then you can open a Solo 401k as well.

6. You haven't spent the funds of Flexible Spending Account (FSA)

To get the benefit of Flexible Spending Account (FSA) for healthcare expenses, you need to spend the fund before December 31.

If you don't do that, you will lose the benefit.

Remember, you can use the fund for more than basic medical expenses (LASIK surgery and glasses, dental treatments, and Alcoholism treatment).

You can check out this website https://www.fsafeds.com/ to know in detail.

7. You planned a luxurious and long trip

Most of us love to overspend when it comes to planning a trip.

You don't give a second thought before using a credit card to book a flight or a costly hotel.

This habit is dangerous since you have to pay the credit card bills on time.

If you miss a single payment, you will start accumulating costly credit card interest charges.

So, from now onward, make sure you plan a trip staying within your means. Before using your credit card, make sure you can afford the bill.

8. You lived paycheck to paycheck throughout the year

If you are one of them who live paycheck to paycheck, then be aware.It could be a sign of falling into biggest financial trouble.

Living paycheck to paycheck indicates that either you are living beyond your means or your monthly income is not sufficient.

To avoid living beyond your means, you need to follow a budget, so that you can set aside a certain amount after meeting necessary expenses.

Thus, you will be able to build a savings cushion.

And, if your monthly income is not enough, then you have to try to boost your income.

Try to implement this strategy this year to stay away from financial problems.

9. Not giving importance to an emergency fund

57% of people in our nation have less than $1000 in their bank account; 39% of people have no savings!

Shocking or frightening!

I think it is frightening because not having enough money in the bank account can lead to major financial havoc.

In most of the cases, when a fatal emergency arises, people with no savings usually take out a payday loan or use credit cards to manage the situation, which is a blunder.

Some people even use their retirement savings to manage an emergency, which is even a fatal mistake.

Having an emergency fund helps you to fight an unexpected emergency without falling into unwanted debts.

So, if you haven't yet built an emergency fund, then make sure you work on this financial To-Do in the coming year.

Try to save at least 3-6 months of living expenses in an emergency fund.

By doing so, you will be able to avoid emergency like job loss, sudden illness, natural calamity, etc.

Lastly,

As per the Wells Fargo study, 60% of Americans are investing too conservatively for their retirement. They are heading towards an insecure retirement due to lack of knowledge in investments.

Financial experts suggest that people who are doing well with their money should make investments to grow their money.

Shying away from investments can make your financial future uncertain.

If you have already tried to make investments that didn't work well, then it is the time to make changes in the strategy to get a better result.

Try to gather investment knowledge or seek guidance to make wise investments in coming years.
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