I've spent the last 15 years immersing myself in finance and money by earning a degree in finance working as a financial adviser and also building my own businesses but one of the most important lessons I've learned isn't about growing wealth it's more about being proactive with your finances so as the end of the year approaches it's the perfect time to set yourself up for success and in this video I'm sharing seven crucial Financial moves you should make to take control of your money avoid costly mistakes and start 2025 strong let's start with number one reviewing
your assets so the first thing you want to do is to Simply tally any of your assets that can be turned into cash in less than 1 to three business days this can be anything from your money market funds your cash cash under your mattress or any buying power that you might have in a brokerage account we want to know how much cash we have liquid in case we run into an emergency an unexpected expense or in 2025 if your costs increase like the cost of your car insurance or perhaps your gas or your groceries
when it comes to your cash Reserve we've talked about knowing your exact cost to run your household on this channel before in order to set up that ever so important emergency fund so if your monthly needs to run your household are $3,333 a month then your emergency fund should be at least 3 to six times that or 10K at the 3-month level or 20K at the 6-month level having a good amount of cash liquid lets you stay safe gives you that buffer and helps you sleep better at night as well additionally if you know that
in 2025 you need to make a cash purchase or you need cash to let's say buy a house or even spend money on a wedding I would suggest just having that money in a high yield savings account because you don't really know what's going to happen in the market just make sure that if you do have cash don't keep it in a standard checking account where it doesn't get you any interest I think that is the number one cardinal sin on this channel I will link some high yield savings Partners down below but honestly just
even keeping your cash in a money market fund within your brokerage account can be good too because they are usually paying roughly the same interest rate as high yield accounts and sometimes a little bit even more the point is that by the end of 2024 you should know exactly what your liquid assets look like so that in case you are far off from where you need to be you have that time to correct it before 2025 starts number two is the 41k match so you want to take advantage of that free money before the year
ends again a 41k is 100% free money and honestly you actually need to do this in order to hit retirement as quickly as possible now the thing with the 401K matches that I'm really glad you're watching this video right now is that you have until the end of the year this calendar year to actually take advantage of it so you have about a month and some change to make sure you talk to your employer if you still haven't done this according to a Vanguard report 63% of retirement plans out there have some sort of matching
mechanism so if we can take advantage of this before the end of the year we absolutely should let's say your hypothetical salary is $100,000 a year and your company offers to match 50% of up to 6% of your salary this is the most common type of match and it's known as a partial match this phrase just means that of your 100K salary 6% of it or $66,000 of any contribution will be matched half by your employer so when you contribute $6,000 your company will give you $3,000 free meaning that your total balance will be $9
,000 at the end of that year because your company gave you that extra 3K so you always want to do this if you can especially if your employer offers it because it's literally free money and so if you don't know if your employer offers it you want to at least email your HR department and just figure out hey we have any 401K programs other types of matches include a dollar Ford dooll match and that's known as a full match so that's where your employers will just match 100% of your contributions up to a limit so
for example if you make 100K a year again they might match 100% of up to 4% of your salary or $4,000 total now even though this is pretty widespread information there are studies and articles that point out at least onethird of people still don't do this or they don't even contribute enough money to take full advantage of that match quote a Vanguard study found that 48% of 401k participants save more than their matching contributions would requir while 18% saved exactly enough to get the full match but that left 34% of participants who either don't contribute
or don't contribute enough now let's say your employer doesn't offer any matches or you're in a different country you should still make sure you're planning for the future so you can do that by maxing out any tax-free retirement accounts you might have access to so for example in the United States you could do the Roth IRA or the IRA now with those accounts they actually have a look back period so you can actually contribute to those in 2025 for the year of 2024 so there's not really a huge urgency to get that done by the
end of this year I post those kind of updates and reminders on my Twitter so if you guys aren't following me on Twitter already make sure to do so I'm actually posting there a lot these days and I would love for you to join that Community another way I've personally set myself up for success in 2025 is developing my own personal website and I want to take a moment to tell you about my experience with framer decom this is a brand that I personally reached out to because I loved their product so much now I
have literally zero experience writing code but with framer I was able to build this personal website of mine from scratch in about four to five hours and honestly I think it looks pretty Sleek building the website was all drag and drop super intuitive and they've got tons of templates to choose from that you can just tweak to fit your style it was really fun making my own website and honestly it was pretty easy as well if you want even more detailed insights framer lets you connect tools like Google analytics but for me the built-in Integrations
have been a game changer I finally feel like I know what's working and what's not on my website so if you've been putting off building your website trust me framer decom is where it's at I mean it's literally quick it's easy it's totally beginner friendly so go check them out I'll link them down below now let's get into number three of today's video number three today is to sort out your debt so that the third thing that you should do before the year ends is to take count of every single liability that you owe money
on whether you owe money on a car a home a jet ski or heck even a rare collection of Pokemon cards that you might have financed getting a list of all your debts gives you a clear understanding of what you have to pay off and then figure out what order you should pay them off in now there is a concept of good versus bad debt and this graphic right here by bedel Financial illustrates that in an Ideal World the perfect amount of debt is you guessed it no debt at all however if you do have
some debt let's take a look at the good types of debts these usually have lower interest rates and they likely will provide some sort of return over time generally these will positively impact your credit score as well uh and so having good debt is generally okay as most people will have some sort of debt in their life in the form of say a home mortgage a loan on education or even a business loan bad debt on the other hand is typically comprised of higher interest rate debt so more than a 15% APR usually and they
aren't backed by a value increasing asset so these can be things like car loans credit card debt or even cash advances now in my opinion on this list credit card debt is usually the worst type of debt and if you're someone that is nearing the end of the year with some credit card debt left this is the perfect time to try to pay off most of it while you can this is especially true if you get a year-end bonus at work make sure you actually use that bonus wisely and don't just go blow it at
say the club often times people will ask me if you can still invest if you have some debt and the answer is that it depends on your interest rate in general if you're interest rate on your debt is less than 3 to 5% you can invest at the same time because the market on average generates a 8 to 10% return per year so long as market returns are greater than your interest rate it's still financially optimal to invest instead of just prioritizing paying off debt as soon as possible however if you value your peace of
mind perhaps you just want to pay off that debt first and just get it out of the way all right the number four thing you should be doing before 2024 ends is to actually review and negotiate your bills this time of year is a really perfect time to reassess your recurring expenses and try to negotiate a better rate or a better contract so I'm sure you have some sort of insurance cable and internet some sort of utilities or even a lender for your home mortgage usually these providers are open to adjustments as long as you're
willing to be proactive and pick up the phone for example often times at the end of the year I can call my internet provider and ask for some sort of contract extension in exchange for a lower monthly rate and these savings may seem small at first but over time they can add up significantly especially if you rinse and repeat asking different providers for better rates at the end of the year this might take you a couple of hours on the phone but it's well worth it and the way that I would start is by the
following number one I would call the providers that actually cost you the most money first so you probably want to hit the insurance providers for your car your home or even a rent or policy number two be nice on the phone these people don't owe you anything and their job is hard enough as is but if you are nice on the phone sometimes they join your team and they actually can pull some strings for you number three ask if you qualify for discounts such as if you bundle multiple policies or you get a discount for
being a loyal customer for X number of years or like I said earlier if you can resign a contract extension for a lower rate perhaps even matching a promotional rate they have for new customers number four then I would start to call the smaller providers where a change in your rate may not be significant but still is worth it so for example your internet provider your cable your mobile phone provider heck you can even talk to your gym about their membership pricing I don't know if you'll get that far but you you can talk to
them and lastly as a bonus you can actually call yourit credit card company I know they're not a provider in the traditional sense but calling your credit card issuer to negotiate let's say a lower interest rate or perhaps inquire about some promotional offers that can save you money on interest is probably worth it pretend you're able to save hundred bucks a month on your car insurance after calling them and bundling home and auto that's $1,200 a year just for a phone call and I think that's pretty good if you ask me number five is that
you should be setting a budget and a savings goal for 2025 if you don't have a budget already one method I would suggest is something called reverse budgeting that's where you take your monthly income and take your savings out of your income first and set it aside and this is sometimes also referred to as paying yourself first for example let's say your monthly income is $4,500 and each month you want to save 600 of that a month so what you want to do is set aside the $600 first and then use the remaining $ 3900
towards the other costs in your life such as groceries bills rent and transportation and in order to do that effectively you ideally should be tracking your own expenses and really understand where your is going once you're able to see where your money goes you can make a plan to reduce the spending on let's say the problem categories you might have for 2025 now if you already have a budget under control then what I would suggest is targeting a savings goal of at least 20 to 25% of your gross income per year that 20% would include
things like your 401K retirement contributions you actually want to include that as part of the 20% and this 20% savings goal is good because not only is it five times the personal savings rate in the United States it ensures that you set aside a significant if ific amount of your money to grow over time especially if you're able to start early let's pretend you earn 50k a year starting at the age of 25 and you save an invest 20% of that that could still compound to a meaningful $2.8 Million by retirement assuming a 8% return
now that is assuming you save and invest all 20% of it but even if you just did $5,000 a year or 10% of your income that's still $1.4 Million by the age of 65 and that's quite reasonable too saving 20% allows you to build an emergency fund while still in investing for long-term goals as well as I think it just creates opportunities for greater Freedom within your life whether that's retiring early pursuing a career change or even taking a sabatical if you're young in watching this I would think it's just best if you can save
20% from the get-go and only spend the remaining 80% on your needs and your wants if you're able to stay this disciplined throughout your life then I think your wealth will compound really quickly fun fact I ran this poll on the community tab two months ago and a large majority of you guys save over 10% so that's amazing and there's also some crazy super Savers at 50% I think that's just a really great sign of the community that we've built together the number six thing you should do is tax loss Harvest if you invest in
the markets at least in multiple different types of funds or stocks then you should definitely consider tax loss harvesting before the end of the year this is a strategy that has a complicated and scary name but all it really means is that you will sell Investments that have gone down in value to offset any of the gains that you've realized throughout the year let's say in March you sold Nvidia stock and you made $5,000 on that gain and you cash it out for Home Improvements like some yard supplies and buying a new TV well at
the end of the year when you file your taxes that $5,000 gain is a capital gain and you would owe taxes on the $5,000 that you cashed out but the brilliant strategy here is that you can offset that gain with the loss of another stock so let's pretend you also own Airbnb stock within your portfolio but you're down $3,000 on this position in total if you sold Airbnb at a $3,000 loss that lets you offset some of the $5,000 gain from your Nvidia sale back in March so you would go ahead and sell Airbnb at
a $3,000 loss and therefore the total amount of capital gains that you would owe on your tax return at the end of this year is 5,000 minus 3,000 so only $2,000 now please note you actually have to have sold and realized these gains or losses any unrealized gains don't count for tax loss harvesting and now you're probably also thinking well yeah I could just realize the loss with Airbnb and buy the stock right back up on the same day that counts right well unfortunately there is something called The Wash sale rule that rule doesn't allow
you to Reby the same security within 30 days of selling it and it was created to prevent this exact scenario the rule wants you to actually exit your position not just exit it for tax purposes and buy it right back up now a lot of Robo advisers and even human advisers will probably work around this by simply investing in a similar asset in the same sector for portfolio balancing purposes and that's completely legal and it's a good workaround another fun fact that I personally love is that people often get this wrong on the Internet by
the way is that if you have a big loss on a fund or a stock let's say you've lost $100,000 this year on a Solar stock you can sell that stock so you realize the $100,000 loss and those losses can be used to offset gains over the current and future years until the full 100K loss is utilized so yeah even though you lost 100K on that stock and you're pretty down bad at least the Silver Lining is is that you can offset any future gains until that full 100K loss is actually used up the seventh
thing you should do before 2024 ends is to work on some Target financial goals for 2025 this is especially true if you have your finances in order so some goals may include things like setting up your kids for the future or treating yourself or investing in other assets or upgrading your life within reason for your kids you could set up a 529 plan that's an investment account that allows you to invest and save for any education cost of your child when you contribute to a 529 plan you get tax advantages with your state so that
means you can get a deduction on your income when you contribute also the withdrawals and earnings are taxfree as well so long as they go towards educational expenses that means you pay less in tax upfront and if you know you're going to want to help with your child's tuition in the future this is a great option because of the tax-free earnings nature of this account of course if you don't really care about little Johnny you don't have to give him any money as well you could also set up a custodial Roth IRA which is basically
the same thing as a Roth IRA but it's for a minor and that allows them to invest in a Roth IRA before the age of 18 now for your own goals in 2025 this is where you can feel free to have a little bit of fun if you've worked hard enough on your own finances and you have that taken care of perhaps you work towards saving for a nice vacation or perhaps upgrading your car within reason of course 2025 could be the year where you take calculated risks and actually broaden your financial opportunities as well
so this means uh you might try your hand in investing in real estate perhaps you explore alternative Investments like startups or Collectibles or maybe you even start a side business that you've always dreamed about out the key is to make sure that these goals are actually aligned with your values and what you care about at the end of the day personally my goals include working towards a 40 to 50% savings rate and I also want to save up for a fancy vacation at the end of the year so if you have any suggestions on where
I should go let me know in the comments all right let me know if you guys agree or disagree with the things to do before 2024 ends and as always thank you for watching this video if you'd like to watch my video on the 10 crucial personal finance lessons that transform my life I will leave that video right up here make sure to follow me on Twitter it's Humphrey talks and Instagram same handle I post almost daily there and I'll see you guys in the next video all right peace [Music]
