Binge shopping isn’t the only annual ritual that comes with the winter holidays — the run-up to the new year is also the season for year-end money moves. December offers one last chance to make an impact on the year that’s winding down, and it’s the last, best time to get an early jump on the coming year before it arrives.
Everything looms large at year’s end — from health insurance and taxes to investments and retirement savings. COVID-19 threw a wrench in much of the traditional end-of-year financial housekeeping that has endured through the ages, but some of it is just as relevant as ever. GOBankingRates asked experts what they think of these moves.
Use This Year’s Savings To Invest In Next Year’s Side Hustle
Historically, making a plan to save money throughout the upcoming year was always a standard end-of-year money move. But the pandemic proved that in a long-term crisis a consistent second income stream can be much more valuable than a finite stash of savings. For many, the new December move is to budget any leftover cash not for savings but for seed money to finally get that side hustle off the ground.
The logic behind the savings-for-side-hustle tradeoff is understandable but flawed.
“Putting money toward a traditional emergency fund and building a second stream of income isn’t an either/or recommendation,” said Clayton Wood, CFP, Managing Partner of C. B. Wood Financial.
The trick is to create an extra layer of protection by doing both — but do them in the right order.
“Our clients are encouraged to have three to six months of expenses in cash or cash-like investments first before investing in a second income stream,” Wood said. “Especially in this volatile market, we’d rather clients have the support of an emergency fund, so they feel confident in taking the risk of investing in other income streams, like real estate or a side hustle.”
You can read the entire article written by Andrew Lisa here: We Usually Make These 4 Money Moves in December — What Do Experts Think of This Strategy?
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