If you want to look back on 2025 with great satisfaction, here are some financial moves you might make now or soon:1. Get out of debtIt’s hard to get ahead if you’re paying 15% or 25% in interest while aiming to earn 8% or 10% on investments. So aim to get out of any high-interest rate debt as soon as you can.Image source: Getty Images.2. Live below your meansEach of us should be living below our means — spending less than we bring in. The greater the difference between what you earn and what you spend, the more money you can free up for retirement savings or for your kids’ college educations or whatever is important to you.3. Have an emergency fundUnless you’re financially independent, you’ll want to have an emergency fund at the ready, able to cover at least three or more months’ worth of all nonnegotiable expenses (such as taxes, housing, food, transportation, utilities, etc.). You may not expect to be laid off or to face sudden huge expenses such as a big car repair or major surgery, but it can happen. If you have an emergency fund to tap at such times, you won’t have to break into savings or retirement accounts or take on any debt.4. Rebalance your portfolioWe at the Motley Fool often extol the virtue of investing in great companies (or great and powerful index funds) — and then leaving those investments alone to grow over long periods. Legendary investor Warren Buffett, too, has said that his favorite holding period is forever.Still, it’s sometimes smart to rebalance your portfolio. Imagine, for example, that you’re getting close to retirement or are already retired, and you want to have a portfolio split 60-40, respectively, between stocks and bonds. Well, stocks tend to grow more quickly than bonds, so after some years, your portfolio may be 80% stocks and 20% bonds. If so, you might rebalance, selling some stocks and buying more bonds, to get back to or closer to your desired asset allocation.5. Make good use of retirement accountsTo set yourself up for a promising 2025 and many years beyond that, make good use of tax-advantaged retirement accounts such as IRAs and 401(k)s. Each comes in two main varieties — traditional and Roth.A traditional account receives pre-tax contributions and shrinks your taxable income by the amount of your contribution. A Roth account accepts post-tax money, and if you play by the rules, all your withdrawals in retirement can be tax-free. Imagine amassing an account worth, say, $400,000 by retirement and being able to tap that, tax-free — that’s a big deal!IRA contribution limits for 2025 are $7,000 — or $8,000 if you’re 50 or older. If you have several IRA accounts, that limit is for all of them — so you might contribute $4,000 to one and $3,000 to another, but not $7,000 to each. The 401(k) contribution limit is $23,500 for 2025, with a $7,500 catch-up contribution allowed for those 50 or older.6. Set up an HSA if you can — or an FSANot everyone will qualify for a health savings account (HSA) — you n
Mar. Gen 7th, 2025
