As we approach the final stretch of 2024, it’s more important than ever to position yourself for financial success in the coming year.
Whether you’re looking to achieve specific goals, optimize your tax situation or prepare for potential changes that a new year and election might bring, now is the time to take action. GOBankingRates consulted financial experts to bring you actionable advice on the money moves you should consider making.
Leverage Debt as a Tool for Growth
Dutch Mendenhall, a leader in alternative investments and financial education, thinks there needs to be a major shift in how we think and talk about debt.
“Frame your debt as a tool for growth rather than a burden,” he shared. This approach means changing old habits and shifting the focus from paying off debt to leveraging it for investments. “Presuppose that every action you take today will pave the way for a stronger financial future,” he said.
Maximize Tax Shelters and Retirement Contributions
“Prime yourself by maximizing tax shelters and contributing to retirement plans now,” Mendenhall said.
Elaine King, MBA, CFP, founder of Family and Money Matters and expert at Annuity.org, echoes this sentiment, saying, “Make sure you are at max with your 401(k) and your IRA if you qualify. If you’re in your 40s, then you should consider a Roth IRA.” She reminds investors to add their spouses and children if they have earned income.
Diversify Your Investment Portfolio
Both Mendenhall and King are big on the importance of diversification.
“Diversify your portfolio to balance risk and reward, aligning investments with your personal financial personality,” said Mendenhall.
King adds that this is the time to reallocate, and everyone should ensure their portfolios continue to be diversified.
Audit Auto-Payments and Subscriptions
Josh Richner, founder of FaithWorks Financial, points out a crucial step often overlooked: “The Consumer Financial Protection Bureau (CFPB) has identified and called out deceptive tactics used by companies to trap consumers into subscriptions.”
He adds that while CFPB is focused on eliminating these practices, people should regularly audit their auto-payments and subscriptions. Small, forgotten charges can accumulate over time, and can impact your budget.
Verify Accuracy of Medical Debt Reporting
Richner highlights recent regulatory updates: “Medical debts under $500 should not appear on your credit report.”
Because of this, it’s a good idea to look over your credit report and see if there are any discrepancies to dispute – “particularly regarding medical debts that should have been removed.”
Request a Credit Limit Increase
“With the current economic landscape, we’re seeing that some banks are lowering credit limits for their customers,” Richner shared.
To avoid this sort of reduction in your credit limit – or to increase it! – you might consider requesting a credit limit increase today. This move can help maintain your credit utilization ratio, which accounts for 30% of your credit score.
Review Changes in Credit Card Terms and Conditions
Richner advises staying vigilant about updates to credit card terms. “Some credit card issuers have updated their terms and conditions in response to economic shifts, affecting interest rates, fees and rewards structures,” he said.
By reviewing these changes, you can keep up to date on your terms – and shop around for more beneficial cards and conditions.
Plan For Tax Changes Affecting Deductions and Credits
“The new tax legislation introduced in 2024 includes significant changes to deductions and credits,” Richner shared. “It’s essential to consult with a tax advisor or use reputable tax preparation resources to understand how these changes affect you.”
This preparation will ensure your tax strategy is as smart and forward-thinking as it can be – and potentially reduce your tax liability before the new year.
Consider Debt Consolidation Strategies
King offers a strategic approach to managing debt: “With interest rates going down and appreciated real estate, consider using a home equity line for consolidating debt if paying it down is not available.” However, she also advises to “calculate the fastest way to cut your debt by aggressively paying it down throughout the rest of 2024,” if that’s a viable option for you.
Utilize Gift Tax Exemptions
“Remember that in 2024 you can give $18,000 without tax consequences,” King said.
So if you’re estate planning or supporting family members and want to minimize tax implications, this could be the move for you. Of course, consult a financial professional to make sure you’re doing everything correctly.
Project Your 2025 Budget
There’s no point in waiting to budget until the last minute – start to prepare your 2025 financial goals now. “Start early by projecting your 2025 budget adding your expected inflows and expenses,” said King.
By planning now, you’ll be prepared for any financial bullets (and rewards!) 2025 throws your way.
