As the year winds down, many of us naturally reflect on what went well and where we can improve. That process should include more than just personal goals; it should include our finances. A year-end financial checkup helps ensure your plan remains aligned with your goals and prepares you for a stronger start in the new year.
I like to begin with the basics: your budget and spending habits. Take a moment to review how your income and expenses have changed over the past year. Inflation, lifestyle shifts, or new responsibilities can all affect cash flow. Look for opportunities to cut recurring costs, such as unused subscriptions, and verify that your spending aligns with your priorities. Small adjustments here can create long-term flexibility.
Next, check your emergency savings. A reserve that covers three to six months of expenses is a cornerstone of financial stability. If your costs have risen, your target balance should rise too. Automating regular transfers to savings, even in small amounts, can help you build resilience without feeling the pinch.
Debt management is another key pillar. Review your balances, interest rates, and progress toward repayment. If you’ve received a raise or bonus, consider using part of that increase to pay down high-interest debt. Reducing interest obligations strengthens your overall financial foundation.
Retirement contributions are also worth revisiting before December 31. For 2025, the 401(k) elective deferral limit is $23,500, with an additional $7,500 catch-up for those age 50 and older. Individual Retirement Accounts allow up to $7,000 in contributions, plus a $1,000 catch-up for those over 50 (Source: IRS Notice 2024-75). Health Savings Accounts offer another powerful tool, with limits of $4,300 for self-only and $8,550 for family coverage, plus a $1,000 catch-up for individuals age 55 and older (Source: IRS Rev. Proc. 2024-45). Contributions to these accounts may reduce taxable income while supporting long-term goals.
Life changes are another reason to revisit your plan. If you married, divorced, welcomed a child, bought a home, or changed jobs this year, make sure your insurance coverage and beneficiary designations are still accurate. Life insurance, disability income insurance, and long-term care coverage each play different but essential roles in protecting your family and assets.
Tax planning is also crucial before year-end. Consider charitable giving strategies such as donating appreciated securities and review opportunities for tax-loss harvesting in taxable investment accounts. Be sure to consult a qualified tax professional regarding your specific situation.
Finally, assess your investments. Market performance over the year may have altered your allocation, leaving you with more risk than you intended. Rebalancing can restore your portfolio to its target mix. It’s also an opportunity to review costs and ensure your investments still align with your time horizon and comfort level.
Financial planning isn’t a once-a-year event, but the end of the year provides a natural opportunity to pause and recalibrate. A little intentional effort now can lead to greater clarity, confidence, and peace of mind in the year ahead.
Seth J. Edgil and David Guttery offer products and services using the following business names: Keystone Financial Group– insurance and financial services | Ameritas Investment Company, LLC (AIC), Member FINRA/SIPC –securities and investments | Ameritas Advisory Services, LLC (AAS) – investment advisory services. AIC and AAS are not affiliated with Keystone Financial Group. Information is gathered from sources believed to be reliable; however, their accuracy cannot be guaranteed. Data provided is for informational purposes only and should not be construed as a recommendation to purchase or sell any investment product.
