December is festive…and financially dangerous if you’re not paying attention. It’s just way too easy to blow past your budget while juggling travel plans, party invites, and holiday shopping. Let’s change that. Here are nine money mistakes people make in December, plus practical tips to avoid each one.
9. Letting Unused Subscriptions Roll Over into the New Year
It’s easy to forget about that free trial you signed up for or the streaming service you no longer use. But those monthly charges add up quickly. So before the new year arrives, review your recurring bills and cancel the services you’re not actively using. This act of financial housekeeping can save you hundreds of dollars in the coming year and help you start fresh with a more intentional budget.
TrendingNow
8. Making Last-Minute, Inflexible Travel Bookings
Waiting until the last minute to book holiday travel can lead to a financial disaster. Airfare and hotel prices surge during peak travel times, and inflexibility can cost you dearly. Using tools like Google Flights to track prices and set alerts can help you snag a better deal. Consider flying on less popular days like the Monday before Thanksgiving or Black Friday for the return trip.
7. Falling for Deceptive Store Credit Card Offers
That 15% discount for opening a store credit card at checkout might be tempting, but it often comes with a high price. The average retail store card has an interest rate of over 30%, and if you don’t pay off the balance in full immediately, the interest charges can quickly negate the initial savings. Just stick to your existing credit cards with lower interest rates and better rewards programs.
6. Giving In to Holiday Impulse Buys
The holiday season is full of impulse-buy triggers: retailers using festive displays, limited-time offers, and the overall emotional atmosphere to encourage purchases. The fix? Before making an unplanned purchase, consider if it’s a genuine need or an emotional want. Ask yourself if you’ll still value this item in a month. This simple pause can save you from post-holiday regret and financial stress.
5. Ignoring Year-End Charitable Giving Deadlines and Rules
December is a popular month for charitable giving, but many people miss out on tax deductions by not following the rules. To be eligible for a deduction in the current tax year, your donation should be made by Dec. 31. For larger donations, consider strategies like bunching multiple years’ worth of donations into one year to exceed the standard deduction threshold and maximize your tax benefit.
4. Making Only Minimum Payments on Holiday Debt
With average credit card interest rates above 23%, a $1,000 holiday shopping spree could end up costing you hundreds more in interest over time if you only pay the minimum. The solution is to pay as much as you can each month, even if it’s just an extra $50 or $100. This should help you pay off the debt faster and save significantly on interest charges.
3. Failing to Create and Stick to a Holiday Budget
Without a clear plan, it’s easy to overspend on decorations, gifts, travel, food, and other holiday-related expenses. So before you start your holiday shopping, create a realistic budget that covers all your anticipated costs. Track your spending to ensure you stay within your limits. A budget is your best defense against a January financial hangover.
2. Forgetting to Take Required Minimum Distributions (RMDs)
For retirees, this is an expensive mistake. If you’re 73 or older, you’re required to take a minimum distribution from your retirement accounts (except Roth IRAs) by Dec. 31. The penalty for not doing so is 50% of the amount you should have withdrawn. So if your RMD was $10,000 and you forgot to take it, you could owe a $5,000 penalty on top of the taxes you’ll pay on the distribution. The age for RMDs was recently raised to 73, so make sure you’re aware of the current rules.
1. Carrying Holiday Debt into the New Year
The most significant financial mistake you can make in December is carrying holiday debt into the new year. This financial burden doesn’t just affect your wallet. It also takes an emotional toll. The best way to avoid this is to create a budget, track your spending, and use cash or debit whenever possible. If you use credit cards, have a plan to pay off the balance in full as quickly as possible.
