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Top 3 End-of-Year Money Moves You Need to Make
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As we approach the end of the year, it’s a great time to review your financial situation and take advantage of opportunities to boost your savings. Here are three strategic moves you can make now to set yourself up for a stronger financial start to 2025:
Lesson Notes:
- Contribute more to retirement for immediate tax savings.
- Use up FSA funds before the year ends.
- Charitable donations can lower your taxable income.
- Start planning early for next year’s finances.
LESSON CONTENTS
Max out your retirement contributions
Contributing to your individual retirement accounts not only helps secure your financial future but also provides immediate benefits in the form of tax savings. If you have an employer-sponsored plan like a 401(k), consider increasing your contributions to the annual limit, which for 2024 is $23,000 (or $30,500 if you’re age 50 or older). Even a small increase can make a big difference over time thanks to compound interest.
- Tip: If you’re unsure how close you are to the limit, review your account details online or contact your HR department.
- IRA Contributions: You have until the tax filing deadline in April 2025 to make contributions for 2024, but contributing before December 31 can give you a head start on growing your nest egg.
Use up your Flexible Spending Account (FSA) funds
If you have an FSA through your employer, remember that these funds are typically “use-it-or-lose-it,” meaning any money left in the account at year-end could be forfeited. Some plans may offer a small grace period or allow you to carry over a limited amount into the next year, but it’s best to check with your benefits provider.
Consider using your FSA funds for eligible expenses, such as:
- Medical, dental, or vision appointments you’ve been putting off
- Prescription medications
- Health-related items like contact lenses or first-aid supplies
Pro Tip: Schedule any necessary appointments as soon as possible since healthcare providers often book up quickly in December.
Make charitable donations for tax benefits
The holiday season is a time for giving, and charitable donations can not only make a positive impact but also reduce your taxable income. If you itemize deductions on your tax return, donations to qualified charities are tax-deductible. Be sure to keep detailed records of your contributions, including receipts or acknowledgment letters from the organizations.
- Strategic Giving: If you’re planning a larger gift, consider donating appreciated assets like stocks instead of cash. This allows you to avoid capital gains tax while still receiving the full charitable deduction for the fair market value.
- Deadline Reminder: To qualify for a deduction on your 2024 tax return, donations must be made by December 31.
Start planning now
Taking these steps before year-end can put you in a better financial position and reduce stress when tax season arrives. If you need guidance, consider consulting with a financial advisor to tailor these strategies to your personal situation.
Want more financial planning tips? Be sure to tune into Ent’s Sound Cents podcast, where we share insights to help you make smart money moves year-round.
*PLEASE NOTE: This article is intended to be used for informational purposes and should not be considered financial advice. Consult a financial advisor, accountant or other financial professional to learn more about what strategies are appropriate for your situation. 401k maximum contributions accurate as of 2024.
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