Wow, you tackled a lot in 2024!
As the new year approaches, be sure to take stock of all of the financial wins you’ve had, whether it’s debt you’ve tackled, financing you leveraged to make key improvements to your home, or a saving milestone reached! What went well?
What didn’t go well? What financial missteps do you wish you could tell you from one year ago?
As the new year approaches, it’s the perfect time to reassess your financial habits and redefine your future goals. Here are some smart money moves you can start making right now to help set yourself up for financial success in the coming year.
1. Make (or Refresh) Your Budget
It might seem simple, but using a budget is one of the most important ways to solidify your financial plan.
Budgeting gives you insight into where your money is coming from and where it’s going, and it also empowers you to look for opportunities to cut back on unnecessary spending so you can better focus on paying down debt, saving money, and achieving other financial goals.
Even if you earn enough money to not worry about spending more than you make, it’s a good idea to keep track of your expenses and look for chances to save more effectively.
2. Forecast Upcoming Expenses
It’s not always possible to prepare for big expenses, but if you have some things in mind that you want to do with your money, now is the time to start thinking about how you’re going to afford them.
For example, maybe you’re interested in upgrading your gaming console or home appliance, Or you’re considering something bigger, like a car or house. Whatever it is, it’s a good idea to start saving now to achieve your goal while minimizing the debt you might take on to reach it.
Let’s say your car will soon need new tires. Calculate how much that may cost and divide how much you’d need to save each month to get it. If the tires you have your eye on will cost $750, and you can afford to set aside $125 per month, you could plan to buy them six months from now.
If you don’t plan ahead, though, you may have to delay your purchase. Alternatively, if you make an impulse purchase and charge your credit card, you may be stuck paying back the cost of the item plus interest.
3. Maximize Your Tax Write-Offs
Tax season typically begins at the end of January each year, and you have until mid-April to file your annual tax return. However, tax returns are typically based on the calendar year, so with most things, you have until the end of December to make your moves to reduce how much you owe.
Some of the ways you can maximize deductions and credits include:
- Increasing your contributions to your 401(k) or Traditional Individual Retirement Account (IRA). You can backdate contributions for the first few months of next year, but it’s easier to avoid waiting until the last minute.
- Setting aside money in a tax-advantaged account, like a Health Savings Account (HSA), if you’re eligible to contribute to one (you must have a high-deductible health plan)
- Making some improvements to your home office if you’re self-employed
- Tallying up your expenses for classroom supplies if you’re an eligible educator (you can deduct up to $250)
- Making charitable contributions
It’s a good idea to consult with a tax professional to get an idea of which actions would help you personally. While some of these and other options can help, they’re not always the best choice for everyone.
4. Revisit Your Debt Payoff Plan
It’s not unusual to have debt of some kind. However, if you have high-interest debt, it’s a good idea to evaluate your repayment plan to make sure you’re maximizing your progress.
For example, are you making just the minimum payments on credit cards, or can you afford to pay more? Are you targeting your accounts with the highest interest rates or choosing accounts at random? Could you potentially refinance some of your debt and get a lower interest rate?
If you don’t already have a strategy for paying off your debt, now is a good time to create one. If you do have one, make sure it’s still serving your needs and helping you achieve your goals.
5. Plan for Upcoming Windfalls
If you’re expecting to receive a year-end bonus from work or a tax refund, start thinking about how you may want to use that money to further your financial goals.
There’s nothing wrong with spending some of your bonus or tax refund money on something you want, but consider other ways you can put a portion of any gifts or extra income to good use. For example, maybe your emergency fund is a little low from needs this past year, or maybe you have some holiday gift debt that you can pay off early.
Whatever you do, take the time to consider your needs and goals and how you can make your money work for you.
6. Automate Your Recurring Money Moves
For those of us who don’t enjoy or easily forget the tedious aspects of managing money, there’s good news. You can easily automate money management with savings and payment tools that are built into your everyday bank accounts.
For example, SouthEast Bank’s CardValet app allows you to view all of your debit and credit card balances in one place and offers spending insights to help you with your budgeting. You may also consider a budgeting app like You Need a Budget, EveryDollar, or Mint, which can import transactions from all of your financial accounts across multiple institutions, track your spending, and help you look for opportunities to grow what you have.
Setting up autopay on your credit accounts helps ensure that you don’t miss payments, which sometimes results in late fees and damage to your credit score. What’s more, some lenders may offer incentives for setting up automatic payments, making it a win win. With student loans, for instance, you can often get a discount on your interest rate.
Automating your savings in the form of monthly transfers to your savings account can also help because it treats your monthly saving goal like an expense, making it less likely that you’ll spend the money you wanted to set aside.
Wherever You’re Headed, Make It a Happy New Year!
Preparing for the new year can feel exciting for some and daunting for others. Give yourself a head start by breaking down the process and focusing on each task one-by-one. The more time you invest in setting clear goals, understanding your spending patterns, and exploring opportunities to grow and keep more of what you have, the better off you’ll be!
SouthEast Bank is here to help. Don’t hesitate to explore our resources and tools as you sit down with your finances, and see what products and services may be a good fit to help you manage your money and reach your goals.
Note: Links to other websites or references to services or applications are provided as a convenience only. A link does not imply SouthEast Bank’s sponsorship or approval of any other site, service or application. SouthEast Bank does not control the content of these sites, services or applications.
Information contained in this blog is for educational and informational purposes only. Nothing contained in this blog should be construed as legal or tax advice. An attorney or tax advisor should be consulted for advice on specific issues.
