The end of the year is always a good time to reflect, and your personal finances are no exception. Don't be scared: Even in a year marked by ongoing inflation, there’s a chance your finances aren’t as bad as you might think. Using the tips below, you can end 2023 on a strong note and head into 2024 with all the necessary adjustments you might need.
Max out your retirement contributions
If you have the means, you should max out your retirement contributions to maximize savings before the deadline is up at the end of the year. Currently, 401(k) participants are able to contribute as much as $22,500. For IRAs—traditional and Roth—you can max out at $6,500 in 2023.
Good news for big savers next year: The amount individuals can contribute to their 401(k) plans in 2024 has increased to $23,000, up from $22,500 for 2023. This contribution limit applies to similar employer-sponsored retirement accounts as well, such as 403(b) plans, most 457 plans and the federal government’s Thrift Savings Plan for workers.
The limit on annual contributions to an IRA will be $7,000 in 2024, up from $6,500 in 2023. These contribution limits apply to the grand total contributions you make each year to all your traditional and Roth IRAs.
Don’t lose out on flexible spending dollars
If you have a Flexible Spending Account (FSA), time is running out to use up your remaining balance. Check in with your employer’s rules regarding any balance remaining on Dec. 31 this year, so you aren’t left forfeiting your hard-earned funds.
If you’re unlikely to pack out the rest of your year with doctor’s appointments—either because everywhere is booked months in advance or because that sounds dreadful—fear not. You can spend your remaining FSA funds on other qualifying healthcare costs. You can use FSA funds to upgrade your prescription eyeglasses or buy more contact lenses. You could also hit your local pharmacy and stock up on certain FSA-eligible over-the-counter products, like first aid supplies, popular cold medicines, and even sunscreen. You can find a complete list at the FSA store here.
The employee health FSA contribution limits are increasing from $3,050 to $3,200 in 2024.
Review tax withholdings
Sure, Tax Day isn’t for a few more months. Still, now is a good time to review your tax withholdings and payments. If you had a major life event in 2022—like a marriage, divorce, or child—you probably want to adjust your withholding. Check out the Tax Withholding Estimator from the IRS to effectively tailor how much income tax to withhold.
Update your beneficiaries
Like I mention above, if you had a major life change, you’ll want to update the beneficiaries of your finances accordingly. Write down the names of everyone included in the beneficiary portion of your bank accounts, retirement accounts, life insurance policies, and annuities. The end of the year is a prime time to take stock of anyone who may have entered or exited your life and needs to be covered (or perhaps removed).
Review your financial goals
No matter the current state of your finances, it’s important to be honest with yourself. Sit down and physically write out where you could boost the health of your personal finances. Think: Do you have a plan to pay off your debt? Does your spending need to reined in? Are you saving where you could be investing, or vice versa?
Think about your priorities going into the new year. You might consider investing in a financial professional to use as a sounding board, as their perspective could be the nudge you need to create (and achieve) your short- and long-term financial goals.