As the year draws to a close, it’s the perfect time to take stock of your end-of-year financial health check and set yourself up for success in the year ahead. Whether this year flew by or felt like a marathon, now is your opportunity to review where you stand and make adjustments for the new year.
Here’s a 12-step financial health check to help you assess every aspect of your financial life:
1. Align with Your Family Values
What are your family’s core values, and do your spending habits reflect them?
Taking time to identify and evaluate your values. Mine include joy, health, community, and nature—these values help clarify what’s most meaningful for me.
Reflect on how well your actions in your end of year health check and make sure your financial decisions align with your values this year.
For example, if “health” and “nature” are priorities, have you invested in activities or tools that promote well-being? This year I plan to invest into travel to the national parks and kayaking to lean into these values.
As a parent, consider sharing these values with your kids through conversations about spending choices and time allocation. Ask them what their values are and how you can incorporate these into your year.
2. Define Your Financial Mission Statement
What is money’s purpose in your life?
Take a moment to jot down three ways money supports your goals.
Maybe it’s about creating family experiences, ensuring long-term security, or empowering your children to become independent. Defining your financial mission brings clarity to how you use money to achieve what matters most.
3. Assess Your Net Worth
Net worth equals assets (like savings, investments, and property) minus liabilities (like debt).
Tracking your net worth annually provides a big-picture view of your financial progress. If it’s increased, fantastic! If it hasn’t, that’s okay—it’s about knowing your starting point. Use tools like Monarch Money, YNAB or Personal Capital to make tracking net worth and spending easier.
4. Review Income and Expenses
Look back at your income and expenses from the past year as part of your financial health check.
Did your spending align with your budget?
Were there unexpected expenses?
Are there changes to account for in the new year?
Your budget should empower you to align spending with your values. For example, do you value community but find you are spending nothing towards it? Whether BBQs or social clubs would further your values, these are things to consider.
Your ‘budget’ can free you to lean into your values.
The important piece is to make sure every dollar has a job to do.
5. Reevaluate Debt Management
Debt plays a big role in your financial health, especially with fluctuating interest rates.
- Review your debts: credit cards, student loans, mortgages, or personal loans.
- Check interest rates and monthly payments.
- Consider strategies like paying down high-interest debt or refinancing certain loans.
These small actions can make a big difference in the long run.
6. Check Your Emergency Fund
Do you have 3–6 months’ worth of living expenses saved?
Recalculate based on your anticipated 2025 expenses. If your fund is low, plan to build it up over the next few months. A well-funded emergency account provides peace of mind that you can handle life’s surprises.
7. Evaluate Retirement Contributions
Are you on track with your retirement goals?
- Check your 401(k), IRA, or other accounts.
- Consider maxing out contributions before year-end to take full advantage of tax benefits.
- Contribution limits for 2025 have increased, with 401(k) limits now at $23,500.
- The catch up contribution for those over age 50 is $7,500.
- And there is now an even bigger catch up contribution available for those ages 60 to 63 of $11,250 in total.
- Traditional and Roth IRA contributions remain $7,000 per person in 2025 with a $1,000 catch up contribution for those over age 50.
Every bit you add today has the potential to grow for your future!
8. Explore Tax-Loss and Gain Harvesting as part of your year end check up
Now, let’s get to Level 2.0 in your financial health check up.
If you’ve been investing, let’s talk about tax-loss harvesting and gain harvesting.
Tax loss harvesting is a strategy to sell underperforming assets and offset gains in other parts of your portfolio. It’s a great way to manage your tax bill, but remember, be mindful of the wash-sale rule, which could impact your deduction if you repurchase the asset too soon.
We primarily see this as an opportunity for clients around stock compensation. Because they have a concentration in stock through the year (or years), we may find a larger opportunity in how this one stock did over time versus a diversified portfolio.
If 2024 was a good year for your portfolio, consider gain harvesting if 2025 will be a lower income year.
For our clients who tend to make over $500,000 per family, a year with a sabbatical, lay-off, or birth of a child may mean a temporary decrease in income for the year and an opportunity to sell stocks at a lower capital gains rate.
The capital gains tax rate goes from 15% to 20% at a little over $530,000 in income. Over $450,000 in income the net investment income tax also applies to capital gains at a 3.8% tax rate.
These strategies can be especially impactful for those with concentrated stock holdings, such as through equity compensation.
9. Review Your Estate Plan
When was the last time you updated your estate plan?
- Ensure your will, power of attorney, and healthcare directive are current.
- Double-check beneficiary designations on all accounts.
If you have children, think about when they’d receive assets after your passing.
If you only have a will in place, are you comfortable with them receiving your total net worth at age 18? If not, you may want to review a living trust to push out the distribution dates.
In my family, we decided to stretch the payments to our children over ages 25 to 35. This primarily came from me thinking about what I would have done with money over that time period and when do I wish I had more funds to work with. For me, it would have been nice to know I could lean into my solo time to travel more, to have help with a down payment on a home, to start saving for retirement sooner and max out contributions, and then to help with additional outsourcing when my kids were born.
What comes up for you?
10. Education Savings
If you’re saving for a child’s education, review any college savings accounts, like a 529 plan.
Make sure you’re on track with contributions and the investment mix makes sense for when the funds will be used. Consider any state tax deductions/credits available and whether you should increase contributions for 2025.
U.S. News stated the average cost of tuition and fees at a private college is now at $43,505. For a public, out-of-state college it is around $24,513.
Education costs can sneak up on us, so staying ahead now can make a huge difference later. To learn more about contributing to a 529 plan, check out our blog post on What is the maximum 529 contribution? Should I fully fund it?
11. Charitable Contributions and Gifting
And finally, let’s talk about giving. If you’re charitably inclined, donating before year-end can help you maximize tax deductions.
Did you have a higher income year than expected? If you’d like to prepare a few years’ of charitable contributions now to offset the higher income, you may want to consider a Donor Advised Fund. A Donor Advised Fund, or “DAF”, allows you to contribute high-gain securities directly to the fund to get a tax deduction on the fair market value of the securities without recognizing potential taxes on the capital gains themselves.
For those interested in passing on wealth to family, review the annual gift tax exclusion. For 2025, this will be $19,000 per person per beneficiary. It’s a great way to share your wealth while potentially saving on taxes.
Learn more about this in our blog post Should I use a Donor Advised Fund for charitable giving?
12. Prepare for Tax Season
The end of the year is also an opportunity to organize for tax season.
- Gather documents related to income, investments, and deductions.
- Consider making charitable contributions before December 31 to maximize deductions.
- Staying ahead of tax preparation can reduce stress and potentially uncover savings.
Which point are you most excited to dive into this year? Let us know in the comments!
Remember, your finances don’t control you – you control them.
Taking time for an end-of-year financial health check can make a big difference in how you approach the next 12 months. Use these 12 steps to align your finances with your values, reduce stress, and set yourself up for success in 2025.
If you’d like help with your financial plan, SeedSafe Financial is here for you. Let’s make your goals a reality together!
The above discussion is for informational purposes only. Recommendations are of a general nature, not based on knowledge of any individual’s specific needs or circumstances, and there is no intent to provide individual investment advisory, supervisory or management services.