Insulate Your Finances Against Seasonal Chills

By FINRA Investor Education Foundation Staff

You can save serious money this winter by protecting your health, your home and your auto from the elements. What seasonal changes can you make to keep your finances warm and dry? Consider these:

  • Maximize your retirement savings. Between now and December 31, determine if you’ve contributed all you can afford to your 401(k) or Thrift Saving Plan. You can’t contribute to those accounts for the 2015 tax year once the calendar year ends.
  • Convert traditional retirement savings to Roth. When you convert traditional retirement contributions to Roth funds, you pay the tax bill now—but not later—because funds contributed or converted to Roth accounts grow tax-exempt. A conversion might make sense for people who think their tax rate will be the same or higher after they stop working and those who can afford to pay the additional taxes for 2015. The deadline to convert for 2015 tax purposes is December 31.
  • Donate to Charity. Charitable donations must also be made by year-end if you plan to take a 2015 tax deduction for your donation. Be alert, though. Pitches from reputable charitable groups ramp up during this season of giving, and so do scams. Do your homework before parting with any hard-earned dollars.
  • Contribute to an IRA. You have until April 18, 2016 to contribute to a 2015 IRA.

Unfortunately, the winter holidays are a rich time for scammers, too. While there are thousands of reputable organizations doing wonderful work to advance their causes, many others aren’t so charitable. Here are some seasonal examples:

  • Scams that ask you to assist a refugee from a war-torn country, who purportedly needs help moving money out of their country. Tread carefully. Be wary of any solicitation from someone who says they’re overseas. If true, that could put them beyond the reach of U.S. law.
  • Scams soliciting holiday employees. Emails or online ads offering high wages for seasonal work, often promising work from home, are usually fraudulent. Don’t respond.
  • Gift exchanges on social media. According to the Better Business Bureau, these exchanges are often pyramid schemes. Be wise and select gifts from only reputable sources.
  • Vendors who demand payment by gift card. Wire transfer and pre-paid cards are still widely used by scammers, but gift cards are coming on strong. Don’t take that bait. 

It might help you to warm up some cold evening by checking the FBI’s list of common fraud schemes. There’s enough there to make your blood boil!

Finally, don’t give yourself financial frostbite. Holiday cheer can’t be purchased online or at an outlet mall. If you insulate yourself from excessive winter spending now, you’ll be sheltered from a blizzard of credit card bills in 2016.

Happy Holidays!

Need some advice about tracking your spending? SaveAndInvest.org can help.

 

 

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