{"id":13633,"date":"2024-12-30T15:58:27","date_gmt":"2024-12-30T23:58:27","guid":{"rendered":"https:\/\/www.soundcu.com\/?p=13633"},"modified":"2024-12-30T16:00:49","modified_gmt":"2024-12-31T00:00:49","slug":"the-best-end-of-year-money-moves","status":"publish","type":"post","link":"https:\/\/www.soundcu.com\/blog\/the-best-end-of-year-money-moves\/","title":{"rendered":"The Best End-Of-Year Money Moves"},"content":{"rendered":"
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The Best End-Of-Year Money Moves <\/strong><\/h2>\n

As 2024 draws to a close, it\u2019s time to get our financial lives in order for the New Year so we can kick-start 2025 with as little financial stress as possible and set some money goals that we can actually reach.<\/p>\n

Annual financial check-ins give us the space we need to review the progress we made in the previous 12 months and check in on where we\u2019re headed for the next 12 months. Although every year will look different \u2014 for example, we may see an increase or decrease in income, we may get married or face an unexpected expense \u2014 many of our money patterns (both good and bad) follow us from year to year.<\/p>\n

For example, when you look back at 2024, did you save as much money as you\u2019d hoped? Did you spend more than you\u2019d budgeted? Did you pay down the debt you were hoping to eliminate? Now is the time to check in and see where there may be room for improvement in 2025. Here\u2019s a checklist to help you do just that.<\/p>\n

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Look At Your Savings\u2014 Including Retirement and Emergency Funds <\/strong><\/h3>\n

A great first step is to make sure you\u2019re making progress toward maxxing out your contributions to a retirement plan. Look first at employer-sponsored plans, like a 401(k) or 403(b), as those tend to come with matching dollars. If you don\u2019t have one, consider opening an IRA and contributing as much as you can. For 2025, the annual 401(k) and 403(b) contribution limits are $23,000 for people under 50, and $30,500 for people 50 and over. For IRAs, you can contribute $7,000 if you\u2019re under 50, or $8,000 if you\u2019re 50 or older.<\/p>\n

Don\u2019t let those maximum contribution amounts discourage you \u2014 let them inspire you to shoot for saving as much as your budget allows during the year. The goal is that every year, as you receive raises or earn more money, you\u2019ll up the percentage of your income that you contribute so you can save as much as possible. The same holds true for emergency funds. While the general rule of thumb is to keep three to six months\u2019 worth of living expenses in reserve, if you\u2019re not able to get close to that yet, don\u2019t panic. In terms of where to keep your emergency fund money, unlike with your retirement assets, your emergency fund should be stashed in a separate High-Yield Savings Account<\/a>. This is because having that money close by, but not too<\/em> close, helps prevent you from reaching for it in your everyday life. That way it\u2019ll be there for you when you need it.<\/p>\n

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Figure Out What Kind of Budget May Work Best For You In 2025 <\/strong><\/h3>\n

If you haven\u2019t set a 2025 budget, now is a great time to set one and make a New Year\u2019s resolution to stick to it. Thankfully, budgeting doesn\u2019t have to mean creating a three-page spreadsheet and itemizing down to the last pack of gum. But it does<\/em> mean having a realistic picture of how much money is coming in and going out on a monthly basis and knowing where<\/em> it\u2019s going. There are countless budgeting methods<\/a> that can work for you such as the backwards budget, the zero-sum budget, or the 50\/30\/30 budget. Here\u2019s a breakdown<\/a>. The goal is that you choose the one that works best for you!<\/p>\n

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Put Some Thought into Next Year\u2019s Benefits <\/strong><\/h3>\n

The end of the year is a great time to make thoughtful decisions about the employee benefits you want for next year. The last thing you want to do is let the open enrollment deadline creep up on you, and then be forced to make a split-second decision on the benefits you need.<\/p>\n

Even if you\u2019ve been happy with your health insurance copays and the overall experience of your current plan, you\u2019ll want to revisit your plan options as prices change. Also consider your family\u2019s expected medical expenses and medications for the year, as well as the doctors included in your plan\u2019s network.<\/p>\n

Likewise, if you have a partner, and they are eligible for health insurance via their employer, you’ll want to run the numbers to see which policy will give your family more for less. You may also want to consider the benefits of choosing a high-deductible health insurance policy that could make you eligible to contribute to a Health Savings Account or HSA \u2014 especially if your employer also contributes to the account. Putting pen-to-paper on all of your options is the best place to start.<\/p>\n

While you\u2019re at it, take a comprehensive look at all the benefits offered by your employer and make sure you\u2019re not leaving anything on the table. There may be benefits on offer that you didn\u2019t even know about, including disability insurance, gym memberships, healthy living programs, commuting benefits, or a financial wellness program. Your HR department can share details on everything available.<\/p>\n

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Speaking Of Benefits<\/strong>\u2014 <\/strong>If You\u2019re Eligible, Make HSA Contributions<\/strong><\/h3>\n

Did you contribute to an HSA in 2024? If you have an insurance policy with a deductible of at least $1,600 for self-only coverage, or $3,200 for family coverage, it\u2019s something you\u2019ll want to consider for 2025. It\u2019s easier if you have an HSA through your employer (that allows for direct-from-paycheck contributions typically), but you can also open an HSA on your own, often via your credit union, as long as your health insurance policy qualifies.<\/p>\n

The limits on how much you can contribute to your HSA in 2025 are $4,300 for individual coverage and $8,550 for family coverage. HSAs<\/a> are amazing savings vehicles for several reasons. First, all contributions you make to an HSA are either pre-tax (if you make them through your employer) or tax-deductible (if you\u2019re making the contributions on your own). Also, the money you save grows tax-deferred, and it can be used tax-free for eligible medical expenses at any time. In other words, money in an HSA equals big tax savings for you!<\/p>\n

Unlike a Flexible Spending Account (FSA), you don\u2019t have to use the money in an HSA by a certain deadline \u2014 the money is yours to use forever. Your HSA contributions can be used for health insurance deductibles, copayments, dental or vision care, prescription drugs and over-the-counter medications at any point throughout your life. Or, if you so choose, you can hang onto the money in your HSA until retirement. After you turn 65, you can withdraw HSA money for any reason, penalty free\u2026 But in order for HSA withdrawals to come out tax<\/em> free, they need to be used on a qualified medical expense. (Withdrawals made for any other reason get taxed at your ordinary income tax rate.)<\/p>\n

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Lastly, Gather Documents You\u2019ll Need Come Tax Time<\/strong><\/h3>\n

The end of the year is a great time to start gathering the essential documents you\u2019ll need for the New Year. To start, don\u2019t get overwhelmed by the prospect. There are three primary categories of documents you need to successfully file your taxes next year.<\/p>\n

The first is personal information, such as Social Security numbers or tax ID numbers and birthdates for you and any dependents on your tax forms. You likely already have your numbers on hand, but if you\u2019ve had a new baby, adopted a child, or gotten married, this is a great time to locate everyone’s Social Security cards and confirm their details.<\/p>\n

The second category, some of which may not arrive at your door until early January 2025, is income documents. For individuals who are classified as employees, this will be a W-2, but for contractors or freelancers, you\u2019ll be keeping an eye out for 1099s. Both W-2s and 1099s reflect how much you\u2019ve earned over the course of the year. Also, depending on what your earning and employment situation has been throughout the year, you may also have a 1099-INT for interest income, a 1099-G for unemployment benefits, a 1099-R for retirement, IRA and annuity income, or 1099-MISC for miscellaneous items. It\u2019s good to go over a month-by-month mental checklist for everything you earned during 2024 to make sure you haven\u2019t forgotten anything that\u2019s due to come in the mail, or that you might need to print out yourself.<\/p>\n

Lastly, the third category of information you\u2019ll need to gather is anything related to tax deductions that you plan to take. Since the standard deduction has been raised, itemizing your taxes is less common. But if you do itemize, here are the types of things you might need:<\/p>\n