For better or worse, much of our financial lives run on auto-pilot. The end of the year is a natural catalyst that can prompt you to reassess aspects of your finances that might otherwise remain on the back burner. To start preparing for the best 2024, make these financial moves before the ball drops:
Reassess your retirement contributions
Thinking about retirement contributions is probably not part of your routine, and that’s okay! But making it a habit to check on your contribution amounts and consider adjusting them will serve you well. If you feel like you have a little wiggle room in your budget, increase your contribution by 1%-2%. You probably won’t even notice the change in your paycheck. On the other hand, if you’ve been struggling to save for your emergency fund or to pay down debt, decrease your contribution to give yourself some money back to focus on those goals. If you’re working on maxing out your retirement account, pay attention to whether the contribution limits are increasing.
Make a list of annual expenses
Because most people budget by month, it’s easy to forget about annual or semi-annual expenses like car insurance, annual memberships and subscriptions, credit card fees, and your car registration. Taking the time to think through these types of expenses in advance of the new year and making a list will reduce the likelihood that you forget about them until the last minute when it throws off your budget.
Look up your interest rates
Knowing the interest rates on your debts will help you assess whether you should make any changes to your repayment strategy. Many debts, including credit cards, have variable interests, so if you haven’t checked your rate in a while, it could be different than what you remember. And although fixed interest rates don’t change, you might not remember the exact rate you got on your car loan or personal loan. This exploration might prompt you to focus on paying off a different credit card first, consolidate debt through a personal loan, or refinance a variable interest rate student loan.
Use up your FSA
If you have a flexible spending account (FSA), take a look at your plan to see how much of your balance (if any) rolls over into the next year. If you have an excess, get in your end-of-the-year doctor’s appointments, fill any expensive prescriptions you have, or even stock up on over-the-counter medications you might need. (That last one is a good excuse to clean out your medicine cabinet.) Dental and vision expenses are also FSA-eligible. You can even spend FSA funds on massage with a doctor’s note confirming it’s medically necessary. If you ended up with much more than you needed, set a calendar reminder to make a change during your next open enrollment.
