End-of-Year Financial Checklist: 7 Things You Should Do Before December 31st
As the year comes to a close, it’s the perfect time to take a step back and assess your financial situation. Not only does this give you an opportunity to reflect on the past year’s financial goals, but it also ensures that you’re taking full advantage of the tax benefits and savings opportunities available before the year ends. With a few strategic moves, you can optimize your finances and set yourself up for a more prosperous new year. Here’s your comprehensive end-of-year financial checklist to help you close out 2024 on a high note.
1. Review Your Spending and Financial Goals
Before the year ends, take time to evaluate your spending patterns and whether you’ve met your financial goals. Start by reviewing your monthly budget and expenses. Look for areas where you overspent and identify any unnecessary expenses that can be cut in the new year. Analyzing your spending can give you clarity on what adjustments to make moving forward. If you’ve achieved your goals, that’s great! If not, you can set revised goals for the upcoming year based on your experience. This reflection also helps you understand where you might need to allocate more or less money in your budget for 2024.
2. Max Out Retirement Contributions
Contributing to retirement accounts like a 401(k) or an IRA is one of the best ways to maximize your savings and reduce your taxable income. For 2024, you have until December 31st to make your contributions and take advantage of tax deductions. If you haven’t already, now is the time to contribute as much as possible to your 401(k) or traditional IRA to take full advantage of tax-deferred growth. For a Roth IRA, you don’t receive an upfront tax deduction, but you benefit from tax-free withdrawals in retirement. If you haven’t maxed out these contributions, consider adjusting your last paycheck of the year to make the most of this opportunity.
3. Consider Charitable Donations
Donating to charitable organizations is not only a way to support causes you care about but also an effective way to reduce your taxable income for the year. Charitable donations are tax-deductible, and making these donations before the year ends can lower your tax bill. Whether it’s monetary donations, gifts of stock, or other assets, make sure you have the necessary documentation for your charitable contributions. Also, remember that you can donate items to charity and claim a deduction for the value of goods donated. Check if your employer matches charitable donations to maximize your giving. Donations made before December 31st can still be deducted on your 2024 tax return.
4. Plan for Year-End Tax Moves
The end of the year is an excellent time to strategize ways to minimize your tax burden. If you have investments, consider selling any losing positions to offset capital gains in a strategy known as tax-loss harvesting. If your income has significantly increased this year, consider deferring income or accelerating deductions. For example, paying deductible expenses in advance, such as medical bills or property taxes, can provide a larger tax deduction for 2024. Don’t forget to review your tax withholding to make sure you’re not under- or overpaying for the year. If necessary, make adjustments with your employer before the last paycheck of the year.
5. Review Your Investment Portfolio
Your investment portfolio may need an end-of-year review to ensure it’s aligned with your long-term financial goals. Take a look at how your investments have performed and check if your asset allocation still reflects your risk tolerance and goals. If you haven’t already, consider rebalancing your portfolio by selling off some assets that have grown disproportionately and reinvesting in areas that are underperforming or underrepresented. This also helps ensure your portfolio remains diversified. If you have any investments in tax-advantaged accounts, such as IRAs or 401(k)s, these changes won’t trigger taxes, but be mindful of taxable accounts that might. Taking advantage of these adjustments before the year ends can also improve your portfolio’s long-term performance.
6. Utilize Flexible Spending Accounts (FSAs)
If you have a Flexible Spending Account (FSA) through your employer, be sure to use any remaining funds before they expire at the end of the year. FSAs allow you to set aside pre-tax dollars for healthcare and dependent care expenses, but the funds typically have a “use-it-or-lose-it” policy. If you don’t use all the money in your account, it will be forfeited. If you’re running low on eligible expenses, consider stocking up on medical supplies or scheduling appointments before the year ends to avoid losing those funds. Some FSAs have a grace period into the new year, so check your plan to determine your options. Either way, it’s important to take action before the year closes.
7. Check Your Insurance Coverage
The end of the year is also a good time to review your insurance coverage to make sure it aligns with your current needs. Whether it’s health insurance, life insurance, home, or auto insurance, ensure that your policies provide adequate protection. If your life circumstances have changed—such as a new job, marriage, or the birth of a child—consider adjusting your coverage to reflect these changes. For health insurance, check if you’re still enrolled in the best plan for your needs, especially if you have the option to make changes during open enrollment periods. Additionally, review your life insurance to ensure it’s sufficient to cover your family’s needs in case of an emergency.
Final Thoughts
As 2024 comes to a close, following this financial checklist will ensure that you finish the year with a clearer financial picture and set yourself up for success in the coming year. By reviewing your spending, maxing out retirement contributions, donating to charity, planning for tax strategies, and ensuring your insurance coverage is up to date, you’ll be well-positioned for a strong financial start to 2025. Taking care of these items now can also relieve stress and help you avoid last-minute financial decisions during the holiday rush.
Printable Checklist
- Review Spending & Financial Goals
- Max Out Retirement Contributions (401(k), IRA)
- Make Charitable Donations
- Plan for Year-End Tax Moves (Tax-Loss Harvesting, Income Deferral)
- Review and Rebalance Investment Portfolio
- Use Remaining Flexible Spending Account (FSA) Funds
- Review Insurance Coverage & Adjust for Life Changes
By completing these steps, you’re taking charge of your financial future and ending the year on a solid note.
