Don’t let the end of 2024 pass by without taking these important actions—you’ll thank yourself later.
As the year winds down, it’s easy to get caught up in the busyness of the season. However, if you want to start 2025 on solid financial ground, one of the best things you can do is organize your finances before the year ends.
From building your savings to reducing your tax burden, taking these steps now will set you up for success.
10 Financial Steps to Take Before the End of the Year
Start 2025 with confidence by checking these items off your list now.
1. Use Up Remaining FSA Funds
If you have a flexible spending account (FSA), remember that most of these accounts operate on a “use it or lose it” basis. Unused funds typically don’t roll over into the new year. Before December 31, spend your FSA funds on eligible expenses like contact lenses, prescription medications, or first-aid supplies.
2. Maximize Retirement Contributions
Chris Berkel, investment advisor and President of AXIS Financial, advises putting as much money as possible into your retirement accounts. Each year, there are limits on contributions to 401(k)s and IRAs. Maxing out these contributions now will help you reach your long-term savings goals faster.
3. Make Charitable Donations
Donating to charity not only supports causes you care about but can also provide financial benefits. You can deduct cash contributions on your taxes—up to 50% of your adjusted gross income—potentially lowering your tax bill.
4. Review Insurance Policies
Life changes like marriage, having children, or buying a home can affect your insurance needs. Review your auto, home, health, and life insurance policies to ensure your coverage fits your current situation. Shop around for better rates to save money while staying protected.
5. Rebalance Your Investment Portfolio
Review your investment portfolio to ensure it aligns with your goals. According to Emily Luk, CEO and cofounder of Plenty, rebalancing doesn’t need to be complex. Focus on maintaining a healthy mix of investments and ensuring your cash reserves are sufficient for emergencies. Adjust your risk exposure based on your age and goals, and diversify your holdings to spread risk.
6. Update Beneficiaries
Regularly reviewing the beneficiaries listed on your accounts is essential, especially after major life events like marriage, divorce, or the birth of a child. Ensure your choices reflect your current wishes.
7. Review Interest Rates
The Federal Reserve’s rate changes can impact your savings, debts, and investments. Consider switching to high-yield savings accounts or locking in favorable rates with certificates of deposit (CDs). If you have a mortgage or other high-interest debt, refinancing or consolidating may be worth exploring.
8. Consider a Roth Conversion
If you have a traditional retirement account, converting it to a Roth IRA may save you money in the long run. Roth IRAs are funded with after-tax dollars, meaning withdrawals in retirement are tax-free. This can offer significant tax advantages as your investments grow.
9. Take Required Minimum Distributions (RMDs)
If you’re 73 or older, ensure you withdraw the required minimum distributions from your retirement accounts before the year ends. Failing to do so can result in steep penalties.
10. Set Goals for 2025
Plan for a financially successful new year by setting clear goals. These might include:
- Paying off high-interest debt.
- Sticking to a budget.
- Fully funding your emergency savings.
- Determining your optimal monthly savings amount.
Taking these steps now will help you enter 2025 prepared and confident about your financial future.
