5 of the Best Money Moves to Make Before 2024

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As 2023 comes to an end, it’s time to check your personal finances for the last time. Consider these five money moves before 2024 arrives. 

As we wind down 2023, I’m reminded of last December when inflation was stubbornly high and many economists were predicting a recession. It’s safe to say that recession never came — thanks to strong job growth — and inflation now looks as if it’s losing momentum as we approach 2024. Who knows what the new year will bring, but with the Federal Reserve pulling off an unthinkable stunt (cooling off red-hot inflation without tanking the economy), the 2024 outlook is a little rosier than it was last year.

With that in mind, now is a great time to start tightening up some loose ends and assessing your personal finances for the new year. As you start preparing for 2024, here are some major money moves you might want to make.

1. Max out your retirement accounts

In 2023, you were allowed to contribute $22,500 to your 401(k) and $6,500 to your IRA ($7,500 for those 50 and older).

If you haven’t hit those contribution limits yet, better start cracking. For most 401(k) plans, you have until the end of 2023 to contribute up to the limit, while IRA investors have until tax day of 2024 (April 15) to hit theirs. Take a look at how much you’ve contributed and see what it will take to max out your accounts.

2. Harvest your losses

As you’re looking at your investment accounts, you might as well do some end-of-the-year cleaning. By this I mean selling off stocks and other investments that are clear losers. When you sell off losing investments, your losses can offset the gains from winning investments that you’ve also sold. This is called tax loss harvesting, and it could potentially reduce your tax liability and eliminate some lemons in your portfolio.

For instance, if you sold a stock for a gain of $3,000, you could sell an underperforming stock at a loss of $3,000 and essentially nullify any capital gains taxes you would have had to pay.

Of course, the losing investment has to be held in a taxable brokerage account — it doesn’t work for tax-advantaged accounts, like IRAs and 401(k)s. But the impact on your taxes could be substantial, especially if you’re a high income earner and pay taxes at a high tax rate.

3. Drain your FSA

Flexible spending account holders have until the end of the year to use funds they’ve contributed to their FSAs.

Unfortunately, FSAs function on a “use-it or lose-it” basis, meaning any unused funds could be forfeited to your employer. Sometimes, your employer will give you a grace period of two and half months. If your funds expire at the end of the year, however, now might be a good time to stock up on medications or visit the dentist.

4. Consolidate high interest debt

High-interest debt can fizzle out your excitement over the new year like flat champagne. If you’re struggling to pay off debt, you might want to consolidate your debt before the new year.

One way to do this is to get a balance transfer credit card with a low balance transfer fee. Many of these cards have intro 0% APR periods, during which you can pay down your balance without accumulating more interest. There are some pros and cons to consider — the APR period doesn’t last forever, and the fees can be high — but, all in all, it’s a strategy to consider if you’re struggling with debt.

5. Lock into a high-yield CD

The Federal Reserve announced recently that it will likely start dropping interest rates in 2024. If that holds true, then CD yields, which have been exceptionally high in 2023, might start to shrink in the new year as banks lower rates on consumer accounts. If you have savings you’re not going to use in 2024, now might be the best time to lock it into a great CD rate before the market starts to change.

As 2023 comes to a close, these five money moves could set you up for a good year. Consider them carefully and add them to the other financial tasks you hope to accomplish before the year ends.

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