The holiday season is upon us, and before you know it, we'll be welcoming 2024 with open arms. But before the year comes to a close, there are a few essential financial tasks you can tackle in just 30 minutes or less to set yourself up for financial success in the new year. In this blog, we're breaking down the eight must-do items from our latest podcast episode that will help you start 2024 on the right financial footing.
- Review Your Retirement Contributions
Start by reviewing your 2023 retirement contributions. You can invest up to $22,500 in your 401(k) or employer-sponsored retirement plan and $6,500 into an IRA. If you haven’t done so already, consider maximizing your IRA contributions before the year-end. Additionally, if you receive a holiday bonus, this could be a great opportunity to boost your retirement savings. Don't forget to update your contributions for 2024 as well.
- Check Your Asset Allocation
Ensure your investment portfolio's asset allocation aligns with your financial strategy and that market performance hasn't skewed your desired distribution. Rebalance your portfolio if necessary, and while you're at it, review and update your beneficiaries for your accounts.
- Review Your Debts and Plan for 2024
Take a close look at your loans, including student, home, auto, and credit card debts. Note the loan amounts, remaining balances, interest rates, and terms. Consider your progress in paying down your debt and create a plan for 2024. If you've made significant strides this year, challenge yourself to do even better in the coming year. And remember, paying off high-interest debt should be a priority. You can also explore options like credit card balance transfers to minimize interest payments. If you receive an end-of-year bonus, using it to pay down debt can be a smart move.
- Conduct a Year-End Tax Review
Although tax season is a few months away, preparing in advance is a wise move. Significant life changes, such as marriage or having a child, might necessitate adjustments to your tax withholding status. Based on your current and expected income, you can make tax-efficient transactions, like deferring or accelerating bonuses, mortgage payments, or charitable gifts.
- Offset Investment Gains with Losses
Consider tax-loss harvesting to offset investment gains with losses. This strategy involves selling investments that have decreased in value to reduce taxes on profitable sales. While it's essential to hold investments for the long term, rebalancing your portfolio and gaining tax benefits can be achieved simultaneously through this method.
- Think About Roth IRA Conversions
Diversify your retirement accounts by converting some of your traditional funds to a Roth IRA. This can be especially beneficial if you've had a year with a lower-than-usual income, such as taking an extended work break. Crunch the numbers and see if a Roth conversion makes sense for your situation. Remember to complete the conversion before the year ends.
- Fine-Tune Your Budget for 2024
The end of the year is an excellent time to review your spending and savings. Make adjustments to your budget based on your actual expenses and financial goals. Consider areas where you can reduce costs and negotiate better deals with service providers.
- Check Your Credit Report
Lastly, obtain a free copy of your credit report from www.AnnualCreditReport.com. Ensure that it accurately reflects your financial history. This is especially crucial if you plan to make significant purchases, like a house or car, in 2024. Pay attention to your credit utilization ratio and consider requesting a credit limit increase to improve it.
Completing these tasks can take just a few hours and will leave you well-prepared for 2024. Setting aside time for financial housekeeping now will set you on the path to a successful and financially empowering new year.
Don't hesitate to reach out for support or more information if you need it. We wish you a prosperous 2024!
If you want to listen to the full episode, Your Year-End Financial Checklist: 8 To-Dos to Complete by December 31st, check out www.tsirpodcast.com/125.
