Finish the Year Strong with These Financial Planning Moves
Beyond holidays and resolutions, the end of the year is a valuable checkpoint for your financial journey. It is an ideal time to evaluate where you stand, make strategic adjustments, and set the tone for a successful year ahead. From optimizing your tax strategy to revisiting long-term plans, every decision you make now can position you for greater financial security and growth in the future.
Effective and thoughtful year-end financial planning ensures you enter the next year with clarity and confidence. A financial advisor can recommend suitable financial moves to set yourself up for success in the coming year.
This article discusses practical steps to help you prepare your finances to meet future challenges and opportunities for the new year.
Table of Contents
Below are year-end financial planning moves you can make that can set you up for success:
1. Create a vision for your wealth
A strong financial future begins with a clear plan. It is an opportunity to take a bird’s-eye view of your financial life. Are you progressing toward your retirement goals? Is funding education for your children or grandchildren a priority? What about leaving a legacy that reflects your values? These questions can help define your priorities and work toward a long-term vision.
If you want to retire early, invest in experiences, or ensure financial stability for future generations, having a clear vision will act as your guide. Review your financial roadmap and ensure it aligns with these goals. Make adjustments as needed, so that every step you take supports your broader aspirations.
2. Maximize retirement contributions
Securing a comfortable retirement begins with making the most of the accounts designed to help you save for the future. As the year draws to a close, it’s critical to ensure you’re maximizing your contributions to retirement accounts like 401(k)s and IRAs. The Internal Revenue Service (IRS) sets annual contribution limits which get revised and adjusted sometimes. For 2025, employees can contribute up to $23,500 to their 401(k) plan with an additional catch-up contribution of $7,500, if they are 50 and above. On the other hand, the combined annual contribution limit for Traditional IRAs and Roth IRAs is $7,000, or $8,000 if you’re age 50 or older. These additional contributions are particularly valuable if you’re catching up on savings or want to strengthen your retirement nest egg during your peak earning years. Contributions to traditional accounts can lower your taxable income for the year, while Roth contributions provide tax-free growth in the long term.
3. Maintain sufficient funds in your emergency fund
Start by reviewing your emergency fund. This fund should ideally cover three to six months of essential expenses, such as housing, food, and utilities. If your reserve is falling short, prioritize building it up before allocating funds elsewhere. An adequate emergency fund provides peace of mind and a safety net for unexpected expenses, like medical bills or job loss.
On the other hand, if you have more cash than you need in savings, consider putting it to better use. Options like high-yield savings accounts, money market funds, or short-term investments can give you higher returns without locking your money away for long periods. Striking the right balance between liquidity and growth ensures your cash reserves remain both accessible and efficient.
4. Evaluate and enhance investments
Your investment portfolio is a cornerstone for building long-term wealth, but it requires regular attention to keep pace with your goals. The end of the year is an excellent time to review and fine-tune your strategy.
- Rebalance your portfolio: Over the year, market movements can cause your portfolio’s original asset allocation to shift. For instance, a strong stock market may result in an overexposure to equities, increasing your risk level. Rebalancing involves adjusting your holdings by buying or selling investments to restore your intended mix of stocks, bonds, and other assets. This ensures your portfolio reflects your risk tolerance and financial objectives, keeping your strategy on track.
- Expand investment opportunities: Consider enhancing your investment strategy with tax-advantaged accounts like Health Savings Accounts (HSAs), which allow you to save pre-tax dollars for medical expenses while enjoying tax-free growth. If you’re looking to grow your wealth further, explore investments that align with your financial goals, such as real estate, mutual funds, or dividend-paying stocks. For those with gains from earlier investments, reinvesting them strategically can further compound your returns.
5. Adopt tax-smart strategies
Tax planning allows you to adopt smart strategies to minimize your tax burden and keep more of your hard-earned money.
- Offset gains with losses: If you’ve sold investments for a profit this year, those capital gains might come with a hefty tax bill. One way to reduce that burden is by selling underperforming investments to offset those gains. Known as tax-loss harvesting, this strategy allows you to balance out your taxable income while cleaning up your portfolio. An individual taxpayer can write off up to $3,000 in net losses annually. Remember, the losses can also be carried forward to future tax years if they exceed your gains.
- Review tax withholding: Review whether you’ve paid enough taxes to avoid penalties or interest. Use your most recent pay stubs or tax documents to check your withholding status. If you’re falling short, consider making an estimated tax payment before the year’s end. Doing so ensures you’re on track come tax season and helps avoid any last-minute panic.
6. Give with purpose
Charitable giving is a meaningful way to support causes you care about, but it can also be a strategic financial move. By donating thoughtfully, you can maximize your tax benefits. Consider donating appreciated stocks instead of cash. When you donate stocks that have increased in value, you avoid capital gains taxes while claiming the full value of the donation as a deduction. Another option is to use a donor-advised fund, which allows you to make contributions in the present and decide how and when to distribute the funds to charities later.
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7. Share wealth thoughtfully
Sharing wealth with loved ones is a strategic way to reduce your taxable estate while supporting those you care about. The annual gift tax exemption offers a straightforward method to pass on money or assets without triggering taxes, making it an essential tool in financial and estate planning. For the tax year 2025, you can gift someone up to $19,000 without reporting it to the IRS. Whether it’s contributing to a college savings plan, assisting with a first home purchase, or offering general financial support, these gifts benefit both you and your recipients.
8. Revisit beneficiary and ownership details
As life changes, so should the details in your financial and legal documents. The end of the year is a great time to review your accounts, insurance policies, and estate plans to ensure they accurately reflect your current wishes and family dynamics.
Start by double-checking the beneficiary designations on retirement accounts, life insurance policies, and investment accounts. These designations override what’s stated in your will, so they must be up-to-date. Also, review the ownership structure of assets such as homes or business interests to ensure they align with your broader estate strategy. Changes like a new marriage, divorce, or the birth of a child are just a few examples of when updates might be needed.
9. Meet RMD deadlines
If you’re over 73, the IRS requires you to take Required Minimum Distributions (RMDs) from certain retirement accounts, including traditional IRAs and 401(k)s. Missing the RMD deadline can lead to steep tax penalties—up to 25% of the amount not withdrawn, making it essential to prioritize this task before year-end. If you turned 73 this year, remember that your first RMD can be delayed until April 1 of the following year, but doing so means taking two RMDs in one tax year, which could increase your taxable income significantly.
10. Check off end-of-year tasks
As the year winds down, it’s important to tackle a few essential items to keep your finances in order and avoid unnecessary surprises. These small but impactful steps ensure you’re starting the new year on the right financial footing.
- Review health coverage: Open enrollment is an opportunity to assess and adjust your health insurance plans for the year ahead. Evaluate your current coverage and whether it still meets your needs. Have your circumstances changed, such as adding dependents or anticipating higher medical expenses? Comparing plan options now can help you choose one that offers the right balance of cost and coverage, ensuring you’re prepared for the upcoming year.
- Settle pending dues: Outstanding bills, debt, or unpaid tax installments can create unnecessary stress and potentially incur penalties if left unresolved. Take stock of your financial obligations and ensure your finances are in order. Addressing these small details now prevents them from snowballing into larger issues later and allows you to close the year with a clean slate.
11. Foster transparency through a family meeting
Taking steps to ensure your goals and legacy are understood by those who matter most is among wise year-end planning moves. Host a family meeting at the end of the year to share key aspects of your financial strategy, such as your will, trust, or charitable giving plans, so everyone is on the same page. Discuss any significant changes in your estate strategy and address questions or concerns from family members. This isn’t just about financial logistics; it’s also about fostering trust, clarifying expectations, and minimizing potential conflicts in the future.
12. Protect your finances online
The digital world demands a thorough emphasis on security. Cybersecurity threats are constantly evolving, and require you to take proactive measures to protect yourself from costly data breaches.
Start by updating your passwords, ensuring they’re strong, unique, and not reused across platforms. Enable two-factor authentication wherever possible—it adds an extra layer of protection by requiring a verification step beyond just your password. Regularly monitor your bank and investment accounts for suspicious activity, and consider setting up transaction alerts. In addition, review how your digital assets like cryptocurrency, online accounts, or stored documents are secured and accounted for in your estate plan.
13. Set goals for the coming year
The end of the year is the perfect time to look forward and set actionable financial goals. Whether you aim to save more, reduce debt, or invest in new opportunities, having clear targets will keep you focused and motivated. Start by reviewing your progress over the past year. Assess if you met your financial objectives and if not, where you fell short to define realistic, measurable goals for the coming year. These goals may include increasing your emergency fund, paying off a specific loan, or exploring new investment strategies like real estate or index funds.
Once you have set your goals, break them into smaller, actionable steps and set deadlines for each. A clear plan will give you direction and help build momentum as you move into the new year.
To conclude
A year-end financial checkup is one of the best ways to ensure your finances are secure, aligned with your goals, and ready for whatever lies ahead. By taking a proactive approach you can finish the year strong and confidently step into the next. You can also opt for the services of a financial advisor who can provide personalized advice tailored to your unique circumstances. A professional can help identify missed opportunities, optimize your tax strategy, and ensure your financial roadmap aligns with your long-term objectives. Use the free advisor match tool to get matched with seasoned financial advisors who can guide you in preparing your finances for the coming year. Answer a few simple questions based on your financial needs and get matched with 2 to 3 financial advisors who may be best suited to help you.
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