4 Key Money Moves to Set Yourself Up for Success in 2025

As we approach the end of the year, it's an ideal time to reevaluate your financial situation and make strategic moves to set yourself up for success in 2025. With interest rates on the rise and the economy at a pivotal moment, taking proactive steps can help you navigate the changing landscape and secure your financial future. Here are four key money moves to consider before the year ends.

1. Maximize Retirement Contributions

Contributing the maximum amount to your retirement accounts can significantly impact your long-term financial success. In 2024, the contribution limit for 401(k)s is $22,500 for individuals under 50 and $30,000 for those aged 50 and older. For IRAs, the limit is $6,500 for individuals under 50 and $7,500 for those aged 50 and older. By contributing the maximum amount, you can reduce your taxable income for 2024 and take advantage of the power of compounding to grow your investments over time.

2. Reduce High-Interest Debt

Rising interest rates make it more expensive to carry credit card debt. To manage your debt effectively, consider the following strategies:

- Check your credit card APRs and consider balance transfer cards like the Citi® Diamond Preferred® Card or Wells Fargo Reflect® Card, which offer 0% introductory APRs on balance transfers to help you save on interest charges.
- Contribute as much as possible to your 401(k) to reduce your taxable income and save for retirement.
- Use up your Flexible Spending Account (FSA) funds before December 31 to avoid forfeiting them. You can use FSA money for medical expenses, including prescription drugs, bandages, and contact lenses.
- Review and rebalance your investment portfolio to ensure your investments align with your financial goals and maintain your desired asset allocation.



3. Optimize Insurance Coverage

Review your auto, homeowners, and health insurance policies to assess if your coverage levels and deductibles are appropriate. Consider increasing coverage limits or adding riders for high-value items. Additionally, evaluate your life insurance needs, especially if you have dependents or significant debts. Regularly reviewing and updating your insurance coverage can help mitigate financial risks and provide peace of mind in the new year.

4. Adjust Asset Allocation Strategies

To mitigate the impact of rising interest rates, consider adjusting your asset allocation strategies by:

- Increasing exposure to short-term bonds, which are less sensitive to interest rate changes.
- Considering floating-rate bonds, which have interest rates that adjust periodically based on changes in a benchmark interest rate.
- Investing in dividend-paying stocks, which can provide a steady income stream and help offset the impact of rising rates on bond yields.
- Diversifying into alternative investments, such as real estate, infrastructure, and private equity, which may offer lower correlations with traditional asset classes and provide a hedge against rising interest rates.

By taking these four key money moves, you can set yourself up for financial success in 2025. Maximizing retirement contributions, reducing high-interest debt, optimizing insurance coverage, and adjusting asset allocation strategies can help you navigate the changing interest rate environment and secure your financial future.