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I'm a fan of New Year's resolutions, but before you can truly look ahead and set new ambitions, it's essential to reflect on the present and evaluate where you stand. The close of the year is a great moment for introspection, and your finances are no exception. With just a few days left in 2024, you still have time to optimize the remainder of this year and position yourself for financial success in 2025.
Don’t miss out on your flexible spending dollars
If you have a Flexible Spending Account (FSA), now is the time to use up your remaining balance. Review your employer’s policies on any leftover funds as of Dec. 31 this year, so you don’t end up losing your hard-earned money.
If you're not planning on filling the rest of your year with doctor’s appointments—whether because appointments are booked for months or you simply prefer to avoid them—don’t worry. You can still use your remaining FSA funds on other eligible healthcare expenses. FSA funds can be spent on new prescription glasses or contact lenses. You could also head to your local pharmacy and stock up on eligible over-the-counter items, like first aid supplies, popular cold remedies, and even sunscreen. A full list is available at the FSA store here.
The contribution limits for employee health FSAs are rising from $3,200 to $3,300 in 2025.
Max out your retirement contributions
If you're able, consider maximizing your retirement contributions now. For 2025, 401(k) participants can contribute up to $23,500. For IRAs—both traditional and Roth—the maximum contribution is $7,000. If you're 50 or older, an additional $1,000 contribution is allowed, bringing the total to $8,000. These limits apply to the combined total contributions across all of your traditional and Roth IRAs.
Starting in 2025, employees aged 60 to 63 will be permitted to make larger catch-up contributions to their 401(k) plans, with new limits set at either $10,000 annually or 150% of the standard catch-up limit—whichever is greater.
The key to a successful retirement plan is to make regular contributions and allow your investments to grow freely over time.
Take a moment to review your tax withholdings
Tax Day may still be months away, but now is the perfect time to assess your tax withholdings and payments. If you experienced a major life change in 2024—such as a marriage, divorce, or the birth of a child—you’ll likely need to adjust your withholding. Use the Tax Withholding Estimator from the IRS to customize how much income tax should be deducted from your paycheck.
Revisit your beneficiaries
As mentioned earlier, if you’ve had any significant life events, it’s essential to update the beneficiaries listed on your financial accounts. Make a note of the individuals designated as beneficiaries on your bank accounts, retirement savings, life insurance, and annuities. The end of the year offers a great opportunity to reflect on who’s entered or left your life and adjust your coverage accordingly.
Reevaluate your financial plan
A budget is a dynamic document. If you lost track of your 2024 goals earlier in the year, it's never too late to refocus and get back on track.
Start with the 50/15/5 rule, where 50% of your after-tax income is allocated for essential expenses like rent, utilities, groceries, etc., at least 15% of your pre-tax income is dedicated to retirement, and 5% should go into an emergency savings fund. The remaining 30% can be spent on discretionary items like travel and dining. You can use this budget tool to track your savings and spending patterns.
Establish fresh financial goals
Regardless of your current financial situation, it’s crucial to be honest with yourself. Take time to sit down and outline areas where you can improve the health of your finances. You might even opt for a values-driven budget. Ask yourself: Do you have a strategy to pay off your debt? Should your spending be more controlled? Are you saving when you could be investing, or investing when you should be saving?
My top piece of advice: Be clear and specific. Identify what goals you're aiming for, when you plan to achieve them, and how much you intend to save. For instance, if you’re planning for an upcoming vacation, set aside a fixed amount of money each month to reach your target. Put a strategy in place to achieve your goals, utilizing tools like budgets, high-yield savings accounts, automated savings contributions, etc.
Reflect on your priorities as the new year begins. You might think about hiring a financial professional to serve as a sounding board, as their insights could be just what you need to set (and accomplish) both your short-term and long-term financial objectives.
