As 2024 draws to a close, it’s a great opportunity to review and decide on any financial actions to take before the new year starts.
Order a Free Credit Report
Ordering an annual credit report can be beneficial to your financial health. You can obtain a free report once a year from each of the three major credit bureaus—Experian, Equifax, and TransUnion—through AnnualCreditReport.com.
Regularly checking your credit report is crucial because it often highlights errors or signs of fraud that can significantly affect your credit score. This in turn impacts important financial aspects such as loan eligibility and interest rates.
By ensuring that your credit report is accurate and up-to-date, you can address discrepancies or fraudulent activities swiftly. This proactive approach helps maintain your financial health and protects your credit standing, allowing you to resolve issues before they cause long-term damage.
Make a New Year Budget
Creating a budget for the new year is a proactive step toward achieving your financial goals. Here’s how you can set yourself up for success.
Identify Your Goals: Clearly define what you want to achieve. Whether it’s saving for a vacation, buying new furniture, or just increasing your savings, having specific goals will guide your budgeting process.
Set Up Targeted Savings Accounts: For each goal, consider opening a separate savings account. You can automate transfers directly from your paycheck to these accounts, which makes it easier to save without having to think about it each month.
Track Your Spending: Keep a detailed record of where your money goes each month, including expenses like food, entertainment, and social outings. This will help you identify areas where you can cut back if necessary.
Maximize Retirement Savings
To make the most of your retirement savings, consider fully funding your tax-advantaged retirement accounts. Contributions to these accounts are made pre-tax, which can reduce your taxable income.
For Individual Retirement Accounts (IRAs), the maximum annual contribution is $7,000, or $8,000 for those aged 50 and older, allowing older savers to catch up.
For those with employer-sponsored 401(k) plans, the contribution limits are even higher. You can contribute up to $23,000, or $30,500 if you are 50 or older. This higher limit for older workers helps them boost their retirement savings as they near retirement age.
Rebalance Your Investment
It’s a good practice to regularly review your investments, including stocks, bonds, and even any cryptocurrency holdings. Market movements can shift the balance of your portfolio away from your target allocation.
Rebalancing helps you maintain your desired level of risk and potentially improve returns. Check what assets you currently hold, see how they’ve performed, and decide if you need to adjust your allocations.
Update Your Beneficiaries: Significant life events, like the birth of a grandchild or other family changes, necessitate updating your beneficiaries on important accounts such as retirement plans and life insurance policies. This ensures your assets are distributed as you wish and simplifies the process for your loved ones after your passing.
Make Charitable Donations and Gifts
During the holiday season, charitable giving can provide tax benefits in addition to supporting worthy causes.
Under IRS rules, cash donations to qualified charities are deductible up to 60 percent of your income, but only contributions to recognized organizations are eligible, and large donations need proper documentation. It’s important to note that these deductions are only viable if you itemize, rather than taking the standard deduction.
To claim these deductions for 2024, donations must be made by year-end. This time is also suitable for making financial gifts to loved ones. Up to $18,000 per recipient can be gifted without filing a gift tax return.
Gifts exceeding this amount are taxable and must be reported to the IRS. This applies when money or property is transferred without an equivalent return.