EOY housekeeping.
What I am focusing on as we head into the New Year.
The end of the year is a great time to review your personal finances as well as set goals for yourself going into the New Year. I always enjoy taking a look back on the progress that was made over the course of the year. Here are two items that might be worth taking a look at.
Total Savings
Take a look back. How much was saved throughout the year? Was this generally in line with where you wanted your savings rate?
By taking a look into total savings, you can also work backwards to get a rough estimate of what you actually spent throughout the year. If this is generally where you anticipated ending up, maybe there are no changes to be made!
If you found that savings were lacking and expenses were much higher than you expected, it might be time to dig into the credit card statements.
While December may not be a great month to gauge your expenses, you now have an entire year’s worth of data to look back on. Go check it out and set yourself up for success all of 2025.
Where did I save?
Where did you actually direct the money that you saved? Was it to your 401(k) plan? Your Roth IRA? Your taxable brokerage account? A high-yield savings account? A Traditional IRA?! Cryptocurrency memecoins and NFTs?!?!
Take a look back and see how your account balances grew.
When you review your asset location, take a minute to think about how your asset location aligns with your current goals.
Contributing a ton of money to retirement accounts may be super helpful when you’re 65, but that is not likely to aid you in making a down payment on a home.
Make sure your savings and investments are aligned with your goals, both short and long-term!
If they aren’t optimized for your goals, then maybe 2025 is a good year to redirect to a more fitting account!
Looking to 2025:
I wanted to outline a few different items that might be on your radar, or maybe they should be on your radar!
Is my cash reserve currently 3-9 months’ worth of my expenses? If not, how can I increase my cash reserve?
Are Roth contributions/conversions something that I should be taking care of this year? (Depending on your time horizon this may not actually be something that you’re looking to facilitate. Again, it is personal finance)
Am I taking advantage of my employer’s 401(k) match to the fullest extent? Maybe you were previously contributing 3% of your salary to your 401(k), but your employer offers a match up to 4%! 2025 could be the perfect time to increase your contribution rate to ensure you’re getting that full match!
Are my investments allocated according to my risk tolerance? 2024 was a stellar year for the markets with large cap stocks doing exceptionally well. Maybe it is time for an annual rebalance!
How much should I be saving each month? Maybe an annual raise has you earning a bit more. This might be a great time to decide what amount of that raise should be saved versus spent!
Was I way over budget for 2024? Maybe it is time to treat yourself to a budgeting software and really get into the weeds of where money is being spent.
Am I carrying any toxic credit card debt? If so, knock that out! You cannot out-invest a 28.99% interest rate!
Is my cash being held in a high-yield savings account? If not, you better get that over to an FDIC insured HYSA!! The golden age of 5% on your cash is gone, but 4% is still attainable! Stop letting the big banks pay you .01% interest on your savings!