Financial Moves to Make Before Year-End

As the year draws to a close, it’s an ideal time to review your finances and make strategic moves to maximize your savings, reduce taxes, and set yourself up for a strong financial start in the new year. Whether you’re trying to lower your tax liability, boost your retirement savings, or tidy up your financial plan, there are key steps you can take to improve your financial situation before the year ends.

Here’s a guide to important financial moves to make before the year-end.

1. Maximize Your Retirement Contributions

Contributing to retirement accounts like a 401(k), IRA, or other employer-sponsored plans can help reduce your taxable income and prepare you for a comfortable future.

Key Actions:

Max out your 401(k): For 2025, the contribution limit for 401(k) plans is $22,500 ($30,000 if you’re 50 or older). Check your account to ensure you’re on track to reach the maximum contribution.
Contribute to an IRA: If you’re eligible, consider contributing to a traditional or Roth IRA. The annual contribution limit for IRAs is $6,500 ($7,500 if you’re 50 or older) for 2025.
Employer matching: If your employer offers a matching contribution for your 401(k), ensure you contribute enough to take full advantage of this “free money.”

By maxing out these contributions, you can reduce your taxable income and ensure you’re building wealth for your future.

2. Harvest Tax Losses

Tax-loss harvesting is a strategy where you sell underperforming investments in taxable accounts to offset any capital gains you’ve earned during the year. This can help reduce your tax liability.

Key Actions:

Sell losing investments: If you have investments that have declined in value, consider selling them to offset gains you’ve made elsewhere. Be mindful of the “wash-sale” rule, which disallows a loss if you buy the same or substantially identical security within 30 days before or after the sale.
Offset capital gains: If you’ve realized capital gains throughout the year, tax-loss harvesting can help you offset some of that income and lower your tax bill.

Be sure to consult with a tax professional to ensure you’re using this strategy correctly.

3. Review Your Budget and Expenses

The end of the year is the perfect time to evaluate your spending habits, cut unnecessary expenses, and set new financial goals for the upcoming year.

Key Actions:

Track your spending: Use budgeting apps or bank statements to review how much you’ve spent throughout the year. Identify areas where you can cut back and redirect that money toward savings or debt repayment.
Plan for upcoming expenses: Take note of any large expenses in the coming months, such as taxes, insurance premiums, or educational costs, and make sure you’re prepared for them.
Create a new budget for the next year: Set realistic financial goals for the year ahead and break them down into monthly or quarterly targets.

Adjusting your budget now can give you a clear financial roadmap for the new year.

4. Review Your Insurance Policies

Insurance is an essential part of any financial plan. Before the year ends, take the time to review your life, health, auto, and home insurance policies to ensure you have the right coverage at the best rates.

Key Actions:

Shop for better rates: Call your insurance provider and shop around to see if you can find lower rates or better coverage elsewhere.
Update coverage if necessary: If your financial situation or assets have changed, you may need to increase your coverage or add new types of insurance (like long-term disability or umbrella insurance).
Review health insurance: During open enrollment, make sure you select the best health plan for you and your family. This is also the time to look at your HSA or FSA options for saving on healthcare expenses.

Reviewing your insurance ensures that you’re adequately covered and not overpaying for protection.

5. Contribute to a Health Savings Account (HSA)

If you’re enrolled in a high-deductible health plan, an HSA can be an excellent way to save for medical expenses and reduce your taxable income.

Key Actions:

Max out your HSA: For 2025, the contribution limit for individuals is $3,650 ($7,300 for families). If you’re 55 or older, you can contribute an additional $1,000 in catch-up contributions.
Consider tax advantages: Contributions to an HSA are tax-deductible, and withdrawals for qualified medical expenses are tax-free.

Taking advantage of an HSA can lower your tax bill while allowing you to save for future healthcare needs.

6. Review Your Estate Plan

End-of-year is a great time to review your estate planning documents, such as your will, trust, and beneficiary designations. Ensuring your estate plan is up to date will give you peace of mind and help protect your assets.

Key Actions:

Update beneficiaries: Ensure that your beneficiary designations for retirement accounts, life insurance policies, and other assets reflect your current wishes.
Review your will and trust: If you’ve had any major life changes (marriage, divorce, birth of children, etc.), update your estate plan accordingly.
Consider charitable donations: If you’ve been thinking about charitable giving, making donations before year-end may allow you to take advantage of tax deductions.

Reviewing your estate plan ensures that your assets are distributed according to your wishes and that your loved ones are taken care of.

7. Make Charitable Donations

Charitable donations can help reduce your taxable income while supporting causes that matter to you.

Key Actions:

Donate to a qualified charity: Contributions to qualifying charities are tax-deductible if you itemize your deductions. Ensure you get receipts or documentation for all donations.
Donate appreciated assets: If you have stocks or other appreciated assets, consider donating them instead of cash. You can potentially avoid paying capital gains taxes on the appreciation.

Making charitable donations is not only a great way to give back but also a way to reduce your tax burden for the year.

8. Review Your Credit Report

Regularly checking your credit report can help you spot errors and address any issues before they affect your financial health.

Key Actions:

Request a free credit report: You’re entitled to a free credit report from each of the three credit bureaus (Equifax, Experian, and TransUnion) once a year. Take advantage of this opportunity to check for errors or inaccuracies.
Dispute any inaccuracies: If you find incorrect information on your report, dispute it with the credit bureau to ensure your credit score stays accurate.

A solid credit report is essential for getting favorable loan terms and securing lower interest rates in the future.

Conclusion

As the year comes to a close, making these key financial moves can help you reduce your tax liability, secure your financial future, and set yourself up for a successful new year. By planning ahead, reviewing your budget and accounts, and taking strategic actions, you’ll be well-positioned to maximize your savings and make smart financial decisions moving forward.