Paying more taxes than you have to. Keep good records so you get all the deductions you’re entitled to. Shift income to a year when you’ll be in a lower tax bracket. Shift deductions to a year when you’ll be in a higher tax bracket.
Not preparing for the unexpected. Set aside at least two months income to protect yourself and your family from serious cash flow problems in the event of an emergency.
Not putting your money to work. Take all excess funds out of no-interest or low interest checking and savings accounts. Put the money to work in liquid but higher yielding places such as mutual funds.
Not setting financial goals. If you don’t have goals, you can’t make a plan to achieve them. Write down where you want to be and when. Then start making a plan.
Making investments based on tips. No matter how well-intended, a tip is the worst reason to make an investment. Investment decisions made under pressure are also unwise.
Failing to have your will updated. Your situation changes along with that of your heirs. Your will should always reflect your present circumstances.
Not establishing credit in the name of each spouse. No one likes to think about death or divorce, but not having credit can be much more than a minor inconvenience.
Borrowing money when it’s not necessary. Not all interest is fully deductible. Interest deductions have been sharply curtailed. Don’t assume tax benefits when you consider borrowing.
Not keeping organized financial records. Poor recordkeeping can cost you significant tax savings, cause you to make bad financial decisions, and leave your family with unnecessary problems if you become ill or die.
Failing to put a yearly tax plan to work as early as possible. Year-end tax planning can be costly. The sooner you put your tax plan to work the greater your savings.