As the year comes to a close and you start setting resolutions for what you want to accomplish next year, having a year-end financial checklist can be invaluable. Don’t forget to put finances at the top of your list. From building up your savings and reevaluating your budget to planning for taxes and updating your long-term financial goals, now is a good time to sort out your finances to ensure a smooth transition into the new year. 

While your unique situation and financial goals will dictate what actions you need to take, here are a few tips to help get you started.  

1. Maximize Your Savings

Have you saved as much money as you wanted to this year? If not, what steps can you take next year to hit your savings goals?

When it comes to retirement accounts, you should contribute up to the IRS limits to take full advantage of tax breaks while increasing your savings growth. The deadline for 401(k) contributions is December 31st, while IRA contributions for the current year can be made up to April 15th of next year. 

Front-loading is another step worth considering as you enter the first of the year. You can front-load your IRA in January with a full year’s contributions, and the IRS lets you front-load a 529 with up to five years worth of contributions. Doing this enables you to take advantage of compound interest. 

As part of a year-end financial checklist, don’t forget about your emergency fund while evaluating your savings goals. If your income or needs have changed this year, you may need to stash away more cash next year for emergencies. 

2. Assess Your Investments

The end of the year is a good time to evaluate the performance of your investment accounts and decide what actions to take moving forward. 

Investment Actions to Take Before the End of the Year

• Tax Loss/Gain Harvesting - If your portfolio did well this year, you could offset your gains by selling poor-performing investments at a loss, reducing your capital gains tax bill. If the reverse is true, and you have more loss than you can carry forward, you should look into tax gain harvesting. 

• RMDs - If you are retirement age and subject to a required minimum distribution (RMD), you need to ensure that you have withdrawn the full required value before the end of the year. Failing to do so can result in a hefty tax penalty. 

• FSAs - Use it or lose it. Check with your FSA plan provider to see if funds can be rolled over to next year. If not, be prepared to spend the money ASAP.

Investment Strategies to Consider in the New Year

• Rebalancing - Experts suggest that you rebalance your portfolio at least once every 6 to 12 months. Rebalancing ensures that your portfolio conforms to your risk tolerance, investment strategy, and financial goals. 

• Diversify - Don’t put all your eggs in one basket. Diversifying your investments across industries, sectors, and investment types helps you manage risk and protect your portfolio.

• Reassess Risk - The level of risk you are comfortable with today might be different than yesterday. For instance, if your income increased this year, you may be open to more risk.

3. Give to Charity

Generosity is not only rewarding on a personal level; it can also have significant financial benefits. Money and other assets that are donated to qualified charitable organizations can be deducted when you file your tax return. 

To qualify for the deduction, donations must be made by midnight, December 31st, and you’ll need to itemize your deductions when you file taxes. 

You can also make charitable donations directly from your retirement accounts to satisfy your RMD. While these donations are not tax-deductible, they will be exempt from your taxable income. 

4. Plan for Taxes

Come January, the IRS will begin accepting tax returns, and the final date for filing your return, or extension, will be April 15th, 2025. As the end of the year approaches, you now only have a few months to prepare and file your taxes. 

To get a head start, you can start gathering documents for any income you received and deductions or credits you intend to take. You can also take the opportunity to review any last-minute tax-saving moves you need to make, like making charitable donations, offsetting capital gains, or contributing to retirement accounts. 

If you’re a business owner or self-employed, you’ll need to make final calculations for your fourth quarter tax payment. 

The end of the year can also be a good time to check your withholdings and see if they need to be updated for next year. 

5. Review Your Budget

Did your debt increase this year? How about your savings? By reviewing your spending versus savings at the end of the year, you can get a good idea of how well you’re sticking to your budget. It may be time to update your budget to better reflect your needs going into the new year. 

And don’t forget about holiday spending. Americans are estimated to spend nearly $1 trillion by the end of the year. If you find yourself with a bit of post-holiday season debt, start looking into ways to pay off that debt quickly.

6. Review Your Estate Plan

If you’ve already worked with your financial advisor to set up a solid estate plan, the beginning of the new year can be a good time to review any changes you need to make. This can include updating your beneficiaries, revising your will, or adding a life insurance policy.

For those who do not yet have an estate plan, now might be a good time to look into getting one. An estate plan is more than just a will or list of assets to distribute; it also includes healthcare directives, funeral arrangements, guardianship of your children, plans for managing estate taxes, and more. A financial advisor can help you craft an estate plan that protects your family and ensures your final wishes are honored.

7. Check Your Credit

It’s important to routinely review your credit to not only check your credit score but to verify everything on your credit reports is accurate. Inaccuracies can damage your credit and could be a sign of identity theft or fraud. The end of this year and the beginning of the new year can be a good time to review your credit, check for fraud, and set future credit goals. 

You can check your credit reports for free through AnnualCreditReport.com. This site lets you check your report with each of the three major credit bureaus as often as once a week. You may also be able to get free access to your credit information and scores through your bank, credit card holder, or other financial institutions. 

If you are a business owner, don’t forget to review your business credit reports as well. 

8. Update Your Financial Goals

What would you like to accomplish next year? Perhaps you’d like to bulk up your retirement savings, pay off student loans, grow your business, or expand your investment portfolio. The end of the year is a great time to take stock of what you would like to accomplish next year and review how well you did in hitting your financial goals for this year. 

However, setting financial goals extends beyond simply outlining a few New Year’s resolutions. Instead, you should aim to think about not only what you want to accomplish this coming year but also what you wish to accomplish long-term. To give yourself the best chance of success in your year-end financial checklist, try setting up a plan for how you are going to stick to and accomplish your goals without sacrificing your current financial well-being.  

9. Meet With Your Financial Advisor

Knocking out your year-end financial checklist will be much easier with a trusted financial advisor. In meeting with your financial advisor, you can review your list and create solid strategies for checking each item off. And it's not just your investment accounts that a financial advisor can help you with; they can also offer guidance on tax planning, budgeting, creating an estate plan, and more. 

The Aligned Perspective: Year End Financial Planning

Kicking off the new year on solid financial footing is easy when you are well-prepared. In reviewing this year’s finances, planning for taxes, evaluating your investments, and setting concrete financial goals, you’ll be able to start the year with less financial stress. 

As you wrap up your year-end financial checklist, don’t forget to touch base with your financial advisor. They can help you knock out this checklist and provide you with indispensable financial guidance year-round.