January 2025
Barbara O’Neill, Ph.D., CFP®, AFC®
Distinguished Professor and Extension Financial Management Specialist Emeritus
Rutgers Cooperative Extension
We hear a lot about New Year's Resolutions around the start of every year but resolutions are typically vague statements like "eat better," "lose weight," "pay off debt," or "save money." Therefore, it is not surprising that many resolutions fail by the end of January because people do not develop action plans to achieve them.
What if you had a month-by-month list of suggested financial action steps? Would this make managing your finances easier? Below is a detailed list with suggestions related to budgeting, saving, investing, taxes, and more.
January- Create a 2025 spending plan (PDF) (budget), reflecting anticipated changes this year in income and expenses. Also, set financial goals for the year and review progress made toward existing goals during 2024. Tax-related documents will start arriving so gather W-2 and 1099 forms and tally up receipts for tax credits and/or deductions. You might also consider starting the $2,500 Savings Challenge (PDF) with just a $2 deposit on week 1 to save $2,500 by 12/31/25. January 15 is the deadline for fourth quarter 2024 estimated tax payments.
February- Get serious about taxes early by preparing your own tax return or handing off organized records to a professional tax preparer. Research tax credits and deductions, as needed, to familiarize yourself with tax rules and avoid missing tax write-offs. Set a spending cap for Valentine's Day so splurges do not derail your budget. If credit card bills from Christmas 2024 are still lingering, set up a debt repayment acceleration calendar using PowerPay.
March- Develop a plan for your tax refund, if any. Tax refunds can be spent, gifted, used to repay debt, and/or saved/invested. Consider using part of your refund to open or add existing funds to a Roth and/or traditional IRA. It is also not to early to start saving and making arrangements (e.g., deposits, plane tickets) for a summer vacation.
April- File your taxes by April 15 and take your first required minimum distribution by April 1 if you turned 73 in 2024. April 15 is also the last date to make a 2024 deposit to an individual retirement account and the deadline for paying first quarter estimated taxes. Other good April activities are "spring cleaning" your finances (e.g., closing old accounts, organizing digital asset (PDF) records, and shredding documents) and adjusting income tax withholding.
May- Budget for seasonal warm weather tasks such as gutter cleaning, landscaping, lawn aeration, etc. Also consider organizing a yard sale to declutter and generate cash by selling unused items. May is also a good time to fine tune your budget for summer vacations, entertainment events (e.g., county fair), and other leisure activities.
June- Pay second quarter estimated taxes by June 15. If you have some vacation time to use up by July 1, take a "financial health day" and work on occasional financial management tasks such as checking your credit report, calculating your net worth (PDF), reviewing insurance policies and estate planning documents (e.g., will, durable power of attorney, and living will), checking credit card rewards, and checking for unclaimed property.
July- Reassess and recalibrate your financial plans with a mid-year financial check-up that includes preparation of a pro forma (projected) 2025 tax return and a review of cash flow. Tweak your 2025 spending plan, as needed, to adjust for increased costs (e.g., insurance premiums) and take advantage of mid-year summer sales.
August- Shop back-to-school sales and take advantage of state sales tax holidays, even if you are do not have a student in your household (e.g., to buy a tablet or laptop). Take advantage of end-of-summer sales and start making plans for holiday travel by booking flights, rental cars, and lodging. Schedule final warm weather garage sales.
September- Pay third quarter estimated taxes by September 15 and boost savings for upcoming holiday expenses (e.g., Halloween, Thanksgiving, and Christmas). Double check the adequacy of tax withholding/estimated tax payments to avoid surprises and plan charitable donations (PDF) for the remainder of the year. Consider the possibility of holiday season employment or freelance work opportunities for extra year-end income.
October- File your 2024 income tax return by October 15 if you requested an extension in April and create a holiday budget with allocations for gifts, travel, and holiday celebrations. This is also the time to review health insurance options during open enrollment season and make changes, if desired. Shop early for holiday gifts and take advantage of pre-holiday sales and discounts.
November- Review health insurance deductibles and health care flexible spending account (FSA) balances to maximize coverage before year-end resets. Other timely tasks: set spending limits for Black Friday and Cyber Monday sales and a budget for Giving Tuesday. November is also a good time for end-of-year tax planning and to consider actions such as tax loss harvesting, "bunching" itemized deductions, and reviewing your tax bracket.
December- Spend remaining FSA funds that are "use it or lose it" and max out IRA and employer retirement savings plan contributions by year-end, if possible. Avoid holiday overspending and use any balances remaining on gift cards from last Christmas. Review year-end financial statements and take a required minimum distribution (RMD) by December 31 if you are age 73+. Calculate your net worth to compare year-over-year changes in your assets and debts. Finally, reflect on your successes and acknowledge your progress. Small steps add up over time.
This article is like a New Jersey diner menu. Just like there are many choices on the menu, there are many action steps listed above. Pick a few that resonate with you and get started. Best wishes for financial success this year.