2024 To-Do List: Five Best Financial Moves to Make

1. Change your passwords

How often should you create new passwords? Cybersecurity experts recommend changing your password every three months. However, there are situations where you should change your password immediately, such as if your account was hacked, after a data breach or if you used an unsecured network. 

A good password can make it more difficult for hackers to access your accounts. But what exactly makes a strong password? Here are a few tips to create a secure password:

• Use a different password for every account
• Use at least 12 characters. To make it easy to remember, use a lyric from a song or poem or make an abbreviation from the words in a sentence. Don't use anything that could be deduced from your social media profile(s)
• Make it a complex password. A 12-character password should include at least one uppercase and one lowercase letter, number, and a special character
• Doesn’t use common words like “password,” “qwerty” or names of pets 

Consider using a password generator to take the hassle out of creating strong passwords. Try the password generator available on McAfee. Using a password generator is easy. You simply enter the desired length and any specific requirements (such as including numbers or symbols) and the tool will generate a secure password for you to use. 

2. Protect your important data and documents

It's a good practice to have both digital and physical copies of your most valuable documents. This ensures redundancy in case of loss, damage, or theft of one format. Also, be sure to secure both copies. Remember that document security is an ongoing process, so make it a habit to review and update your protection strategies regularly.

Paper Copy Storage: The best option for storing paper copies of important documents is in a fireproof and waterproof safe, or in a bank safe deposit box. If you use a safe deposit box, ask your bank or check state laws to confirm who can and cannot access the safe deposit box should you be unable to do so.

Electronic Copies: Store electronic copies of important documents in a password-protected format on a removable flash drive or an external hard drive and keep the storage device secure in your fireproof and waterproof box or safe. Another option is to use a secure cloud-based service like Dropbox, Apple iCloud or Google Drive, to name a few. Just be sure you encrypt your documents or files before uploading them. 

It is critical that in case of a disaster, you must secure all the documents you will need for insurance claims or disaster relief. For additional checklists and guidance on collecting and safeguarding important information, download FEMA’s Emergency Financial First Aid Kit. This all is also why Kiplinger recommends you create a financial plan for natural disasters. 

3. Adjust your W-4 tax withholdings

You may change your W-4 withholding for any reason and may do so whenever you wish. I do suggest you adjust your tax withholdings if you had a dramatic change in income or have a life event that will impact your filing status.  

When you have too much money withheld from your paychecks, you end up giving the government an interest-free loan and getting a tax refund. On the other hand, having too little withheld from your paychecks could mean an unexpected tax bill or even a penalty for underpayment. 

Any change of household income, whether up or down, could put you in a different tax bracket and require you to modify your withholdings. Any time your income goes up, your tax liability will likely go up too. And If you get laid off from your job and stay unemployed the rest of the year, you may have too much tax withheld for the year while you were working.  

Change in income:

• You or your spouse get a second job
• You or your spouse get a job or change jobs
• You or your spouse are unemployed part of the year

Change in filing status:

• You got married or divorced
• You gave birth or adopted a baby
• Your children are no longer dependents

4. Prepare to file your tax return

Your 2023 tax statements will arrive gradually during January and early February, but you can get a head start by organizing all of your receipts for eligible deductible expenses and charitable contributions. Don’t forget to print out receipts for goods and services you purchased online.

Here are a few more tips to make filing your 2024 easier:

Update your name if it has changed. Your refund will be delayed if your name of record does not match the name appearing on your tax return. If your name has changed, you'll need to notify the Social Security Administration as soon as possible. Then you’ll need to apply for a new Social Security card by completing Form SS-5,  Application for a Social Security Card. 

Create an IRS online tax account. If you set up an online tax account with the IRS you will be obtain your tax documents without having to contact the IRS. This feature allows you to log into an account and check payment balances, set up payment arrangements and view prior-year tax returns and reported tax forms.

Arrange to pay taxes due by April 15. The due date for your tax return is also the day your final tax payment is due. If you are unable to pay the full amount you may owe, pay as much as you can. Since the IRS failure-to-pay penalty is generally charged at 0.5% of the unpaid tax per month, paying what you can now reduces the amount you’ll be penalized.

File for an extension. If you know you will not able to meet the tax filing deadline — April 15, 2024 — you can file an extension. You can file one for free using the IRS Free File program or by mailing Form 4868 to the IRS. But note that while an extension gives you six additional months to submit your tax return, it doesn’t extend the time to pay your taxes. 

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5. Increase your retirement plan contributions

Did you get an end-of-year bonus or raise? Consider using some of it to increase your contributions to your 401(k) plan. In 2024, you can contribute up to $22,500 in regular contributions plus $7,500 more in “catch-up” contributions if you’re 50 or older. The deadline for 401(k) contributions is Dec. 31 because they are made through payroll deductions. 

However, if you have an IRA, you can contribute to that account up until the 2023 tax year filing deadline, which is April 15, 2024. The IRA contribution limit is $6,500 and the $1,000 catch-up contribution — if you are 50 or older — takes the total maximum contribution to $7,500. 

The rules about making catch-up contributions to your 401(k) are changing and will go into effect in 2026. Read more about the rule change  New Roth 401(k) Contributions Rule Delayed by IRS: What To Know and be prepared to make the most of the new tax provisions.