It’s never too soon to start preparing financially for the year ahead. While you may be tempted to relax in the final weeks of the year, don’t get too complacent.
There is still time to take action this year to ensure you reach your financial goals in 2025. It also gives you a chance to recover, if just a little, from any monetary missteps you made earlier in 2024.
Here are a few mistakes people tend to make at the end of the year and how to avoid them.
1. Spending all your bonus money immediately
Don’t spend your year-end bonus money before it’s in your hand or ready to be spent. That’s rule No. 1 to avoid this financial blunder.
Once you do have it, think about how you can make your bonus money have lasting value for you and your family.
For example, you could:
- Create an emergency fund for yourself or your loved ones. Set up direct deposit to qualify for a cash bonus.
- Make an extra payment or two on all or a big chunk of your debt.
- Max out your retirement savings contributions. Vanguard found that working with the right financial advisor can double your returns over time. Use this free tool and find the best!
- Add it all to your vacation savings fund.
- Replace a few items in your home with long-term savings in mind, like a new dishwasher or dryer from Black Friday sales.
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2. Getting too caught up in holiday sales
All the huge sales that come around at the end of the year could tempt you to spend more money than you had planned.
That could make it difficult for you to secure a healthy financial future.
Make a list of the gifts you’re buying this year and the gifts you’ve already bought your friends and family. This way, you avoid going into debt because of holiday shopping. Use coupon and cash back sites like Rakuten to save even more.
If you still struggle to control your purchasing decisions, set a budget you can afford and pay in cash only.
3. Misjudging your tax liability
Don’t let year-end tax surprises catch you off guard, especially if you receive bonus payments or profits from investments or real estate sales.
The IRS has bumped up the standard deduction for 2024: it’s now $29,200 for married couples filing jointly, $14,600 for singles and married people filing separately, and $21,900 for heads of households.
If you’re a homeowner, consider whether itemizing could save you more—when your itemized expenses outpace the standard deduction, you might be in for a lower tax bill. A little planning with your accountant now can save you headaches (and money) come tax season.
Massive tax debt can be a burden, but fortunately, there’s professional help available for those who are thousands of dollars in debt to the IRS.
By being thoughtful about your bonus money, resisting the lure of holiday splurges, and staying on top of your tax situation, you’re setting yourself up for a stronger, more secure financial future.
The end of the year isn’t just a time to reflect on the past—it’s a chance to make smart choices that can pay off in the coming year.
Take these actions now, and you’ll thank yourself when 2025 rolls around with fewer financial worries and more growth opportunities.
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