October is traditionally peak pumpkin spice everything season, although Starbucks decided to get the PSL party started in August (apparently, nothing is immune from holiday creep). But crisp air, jack-o-lanterns and blaze-orange leaves all signal the annual transition from one season to the next. And in keeping with the spirit of annual transitions, October is a great month to throw on a sweater, grab a latte and take a deep dive into your financial plan. These last few months of the year are the time to tie a financial bow on 2019 and lay the groundwork for your 2020 goals.
Here are five ways to help improve your finances in October.
PERFORM SOME END-OF-YEAR PORTFOLIO MAINTENANCE
You change your car’s oil regularly and replace the home furnace filter every month (glad we could remind you), but your investment portfolio also needs routine maintenance.
If you’re saving for retirement: If you haven’t checked your investments for a while, your portfolio’s asset allocation may have grown out of balance. If your plan calls for a 60/40 stocks-to-bonds split but you’re at a 75/25 split, you’re probably due for a rebalancing to realign your asset allocation with your financial plan target. Also, if your budget allows, consider maxing out your contributions to you 401(k), IRA or other qualified account before the year ends. Employers with matching programs have different deadlines for when they’ll match your funds, so know that date and max out that benefit if you can.
If you’re retired: If you’re age 70-1/2 or older, the IRS requires you to withdraw a minimum amount of money from certain retirement accounts before Dec. 31 (known as RMDs). If you don’t, you could be penalized 50 percent of the amount you failed to withdraw. Also, start charting your income needs for 2020 so you can pull income from the right sources, at the right time to help maximize income and minimize your taxes.
For both: If you bought and sold stocks this year, check out your unrealized gain or loss report to gauge the taxes you might owe. For example, you could sell some stocks for a loss (known as tax-loss harvesting) to lower your capital gains obligation. Tax minimization strategies can get complex quickly, so it could be a good idea to set up a meeting with a tax advisor and financial advisor to assess your entire portfolio to make any needed adjustments and ensure your goals are on track and your taxes are minimal. Of course, no investment strategy can guarantee a profit or protect against loss, so be sure to work through these strategies with a financial pro if needed.
GET STARTED ON THE FAFSA
The Free Application for Federal Student Aid, or FAFSA, is the form you must complete if you want to receive any federal financial aid, including grants, work-study or student loans. The FAFSA for the 2020-21 school is available on Oct. 1. While you have until June 30, 2021 to complete it, the earlier you submit, the better. Schools need this information for financial aid decisions, but, importantly, the amount of money available in the federal funding pool is first-come, first-serve.
SUBMIT TAXES IF YOU FILED FOR AN EXTENSION
This is one deadline you certainly want to hang on the refrigerator or set a reminder on your smartphone: If you received an extension on your 2018 tax return, you must have your return finished and postmarked by Oct. 15. If you’re curious, here’s what to know about filing for an extension.
FREEZE YOUR CREDIT
October is already spooky time of year, so the last thing you need is a spine-tingling surprise in your financial statements. Indeed, Halloween unofficially marks the beginning of the holiday spending season and that means fraudsters are on the prowl. A 2018 study found that fraud attacks increased 13 percent during the holiday shopping season in 2018. So, if you haven’t already, make sure to freeze your credit. It’s free, it’s easy and it’s effective.
REVIEW YOUR HOMEOWNERS INSURANCE
Trick-or-treaters are going to converge on your home en masse, and while liability coverage is standard in most homeowners’ insurance policies, why not double check your coverage to make sure. And, while you’re reviewing the policy, make sure there aren’t other gaps. Your house probably appreciated in value (especially if you finished a remodeling project), but is your current coverage still enough? You may qualify for discounts if you installed upgrades such as a security system, smoke alarm or hail-resistant roof. Or, of course, you could do a little shopping for better rates.