As we approach the holiday season, it’s the perfect time to reassess your financial strategy. With 2024 winding down, you want to ensure you’re on track to meet your financial goals before the New Year rolls in.
There’s a lot to be thankful for this year—falling inflation and a surging stock market might have you feeling financially secure. But even if this year hasn’t gone as planned, it’s not too late to take charge of your finances.
Let’s dive into seven smart money moves you can implement now to finish 2024 strong and set yourself up for success.
1. Boost Your Savings
First things first: take a close look at your overall savings. Are you saving enough for your future goals—be it a kitchen remodel, a new car, or retirement?
If you’ve recently switched jobs or faced unexpected expenses, you might be falling short. Here’s how to top off your savings:
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Profit from Investments: With the S&P 500 near record highs, consider selling some assets to reinvest the profits into savings. Just be mindful of the tax implications; long-term gains are taxed more favourably.
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Max Out Retirement Contributions: The 2024 limits for tax-advantaged contributions are $7,000 for IRAs (or $8,000 if you’re over 50) and $23,000 for 401(k)s (with an extra $7,500 catch-up contribution for those aged 50+).
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Keep a Holiday Fund: Don’t forget to set aside enough cash for holiday expenses. Financial planner Corbin Blackwell recommends having a “slush fund” equal to three to five weeks’ worth of spending.
2. Establish an Emergency Fund
No matter your financial situation, having readily accessible cash for emergencies is crucial.
The standard recommendation is to have three to six months’ worth of living expenses saved.
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Keep It Simple: Don’t get too creative with where you stash this fund. A high-yield savings account or a money market fund is best.
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Building Your Fund: Consider putting any gains from this year’s stock market into your emergency fund to resist spending it on non-emergencies.
3. Prioritise Your Taxes
Now’s the time to evaluate your tax situation. No one wants to be surprised come tax season!
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Estimate Your Tax Liability: Use the IRS Tax Withholding Estimator to assess whether you’ve paid enough throughout the year.
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Adjust if Necessary: If you’re under withholdings, adjust your W-4 or make a direct payment to the IRS. You can also reduce your taxable income by selling losing investments or increasing your contributions to a health savings account.
4. Consider Rollovers
With tax cuts from previous administrations set to expire, now might be the ideal time to consider rolling over traditional IRA funds into Roth IRAs.
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Take Advantage of Lower Tax Brackets: If you’re in a lower tax bracket, you’ll pay less tax on the conversion.
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Act Before 2025: This window of opportunity to benefit from lower rates won’t last long, so make your move before rates potentially increase.
5. Invest in Your Health
Your physical health directly affects your financial health. Take advantage of the free or discounted checkups your health plan offers.
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Maximise Your Flexible Spending Account (FSA): If you have an FSA, ensure you use all the funds available, as they’re often “use it or lose it” plans.
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Plan for Upcoming Appointments: Book those appointments early to make sure you get everything done before the year closes.
6. Review Open Enrollment Options
Open enrollment season is here, and it’s crucial to evaluate your health insurance coverage.
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Assess Your Needs: Decide if you need to switch plans or adjust your contributions to your FSA based on your health expenses this year.
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Consider High-Deductible Plans: If you don’t have ongoing health issues, switching to a high-deductible health plan could save you money on premiums and allow you to contribute more to a Health Savings Account (HSA).
7. Be Strategic About Giving
As the season of giving approaches, consider how to make your donations work for you financially.
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Donate Appreciated Stocks: This not only helps others but also offers you a tax break.
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Bunch Your Donations: Consider grouping donations into a donor-advised fund for a more significant tax benefit now while allowing you to distribute funds over time.
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Gift Tax-Free: If you’re in a position to give financial gifts, remember you can give up to $18,000 per year to an individual without tax implications.
Conclusion: Finishing 2024 Strong
By implementing these seven smart money moves, you can bolster your finances and finish 2024 on a high note.
It’s all about planning, prioritising, and taking action. As you navigate the final months of the year, make sure to focus on these key areas for a financially secure future.
