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Fall will officially start on September 22nd, which means that you may have already seen Halloween candy displayed along the aisles of your local grocery or drug store. It also means that the kids are back to school and you can now redirect your attention back to your money issues, before the onslaught of the holiday season sucks you in. To help, here are 5 Financial Pitfalls to avoid before the end of the year.
1) Don’t Delay Completing the FAFSA: The Free Application for Federal Student Aid or “FAFSA” is now available for the 2019-20 academic year. This important document determines how much money students and their families get for college-including grants, scholarships and loans. In addition to a new website that works better when viewed on a phone, there is also a new mobile MyStudentAid app. Although the deadline for federal aid is not until June 30th of next year, your state and school may have earlier ones. For some, it’s “as soon as possible after October 1,” which means they have a limited pool of funds that could run out. If you want to maximize your potential aid, submit a FAFSA ASAP!
If your kids are not old enough to apply, talk to them about college financing. According to Fidelity Investments’ 2018 College Savings Indicator Study, a whopping 40 percent of parents with sophomores or older haven't discussed with their kids that they're expected to contribute to college savings and 43 percent have not discussed how much education debt they may incur.
2) Avoid the April 15th Surprise: Check to see how much money you have withheld from your income for tax purposes and then go to the IRS web site to see if the amount is sufficient to cover your needs. You may want to check in with a tax preparer or CPA to determine if you need to change course before the end of the year. A corollary for any taxpayers who filed for an extension: while you already estimated how much money you owed Uncle Sam, your October 15th drop-dead date to file is just around the corner!
3) Don’t Blow Off Open Enrollment: Whether you work for a company, rely on the Affordable Care Act for health insurance or are retired and use Medicare, this is the time of year when you have new options. Many simply do whatever they have done last year, but this could be a mistake. BEFORE the pressure of a deadline looms, review your plan, what you spent during the year and consider what could be likely in 2019.
4) Stop Guessing about Retirement: About half of workers who are 55 and older have not attempted to calculate how much they'll need to live a comfortable retirement. It’s pretty hard to reach a goal if you don’t know where you stand today. There are so many tools that can help with the process, but if you are at a loss, seek professional guidance…more on that below.
5) Don’t Assume Your Financial Professional Puts You First: This week marks World Financial Planning Day – a good opportunity to find out whether or not your financial planner/adviser/consultant/sales puts your interests first, at all times. In other words, does he or she adhere to the fiduciary standard? There has been a great deal of confusion around this topic, but certain designations require that its professionals to act in the best interest of the client at all times. Those include CPAs, CFAs and as October 1, 2019, CFPs will be bound by new Code and Standards, which will expand the scope of the fiduciary standard.