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The time to look at your finances is now

by | Jan 17, 2025 | Financial Wellness, Retirement Planning, Tax Planning

As we step into 2025, one cannot avoid feeling the prospects of new opportunities and new beginnings. Why not seize those feelings and move toward financial growth and transformation in 2025? We all can be more disciplined and proactive in managing our finances. Doing so can set the tone for a successful and financially secure future. What follows are some easy hacks that anyone can follow to lessen stress, improve their financial situation and lower their tax burden.

Maximize contributions to retirement accounts

It is never too early to start thinking about, and planning for, your retirement. Whether you have a 401(k), an IRA, a Roth IRA, or multiple retirement accounts, maximizing the contributions to your retirement account(s) is one of the most effective ways to ensure long-term financial security. If you do this, you will significantly increase your savings and take advantage of tax-deferred growth and employer matching. If there is one savings no-brainer, this is it.

If you do not have a retirement account, consider opening one and get started on contributing to your future retirement. There are many different places you can open one, including: brokerages, banks, life insurance companies, or mutual funds, to name a few. Get started now.

Review your spending habits

If you find yourself feeling that you are not saving as much money as you had hoped, perhaps it is time to take an inventory of, and review, your spending habits. Start with a review of your past monthly spending and see if you made too many unnecessary purchases. You might be surprised by what you waste. You might be embarrassed. Another good idea is to track your expenses for a month, so that you can pinpoint that which is unnecessary. Implementing tracking into your financial routine will help you make more financially responsible decisions.

Build an emergency fund

Few people plan for unexpected financial emergencies, like having to repair your car, a major house expense, a broken appliance, or even an unexpected medical bill. But you should. You can plan to be ready for an emergency. Create an emergency fund or add to your rainy-day fund. Think of an emergency fund as a safety net to protect yourself from any unexpected expense. There are different ways to build your emergency fund including: make a specific monthly goal for how much you want to contribute to your emergency fund or set aside a specific amount from each paycheck. At the very least, make sure you have a line of credit you can tap as a last resort.

Be proactive with your tax planning

The best way to be financially responsible is to be proactive. Take some time to understand and plan your taxes now, instead of waiting until just before you file. Start gathering and organizing your tax documents, so that when it comes time to file, everything is already in order. If you are not comfortable doing your own tax preparation, seek the advice of a respected tax professional. He or she will make sure you are receiving any and all deductions that apply.

Finally, the IRS releases information about federal income tax rates and brackets, tax inflation adjustments and other tax changes for this tax year and future tax years. Take time to familiarize yourself with the IRS website and any tax adjustments that may affect you, not only for this filing season, but in upcoming tax years.

Invest in your future now by taking control of your spending, savings and investing, so that you are more financially independent. Making the effort now to manage your finances will lead to greater financial security and more peace of mind.

This article originally appeared as a column for the Cleveland Jewish News.

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