Follow This Year-End Financial Checklist Through 2025
I love New Year’s resolutions , but before you can properly look forward and set new goals, you need to look back and evaluate where you are at the moment. The end of the year is always a good time to reflect, and your personal finances are no exception . With only a few days left until the end of this year, you still have time to make the most of 2024 and set yourself up for financial success in 2025.
Don’t lose your flexibility in spending
If you have a flexible spending account (FSA), the time limit to use the remaining balance runs out. Check your employer’s policies regarding fund balances remaining as of December 31 of this year to ensure you don’t lose out on your hard-earned funds.
If you’re unlikely to spend the rest of the year making doctor’s appointments—either because everything is scheduled months in advance or because it sounds terrible—fear not. You can use your remaining FSA funds for other qualified health care expenses . You can use FSA funds to renew your prescription glasses or buy more contact lenses. You can also stop by your local pharmacy and stock up on certain FSA-eligible over-the-counter products, such as first aid supplies, common cold medications, and even sunscreen. You can find the full list in the FSA Store here .
In 2025, employee health FSA contribution limits increase from $3,200 to $3,300.
Maximize your pension contributions
If you have the means, you should set yourself up now to maximize your pension contributions. In 2025, 401(k) participants will be able to contribute up to $23,500. For an IRA—traditional and Roth—you can take out a maximum of $7,000. If you are 50 years or older, you can contribute an additional $1,000 for a total of $8,000. These contribution limits apply to the total amount of contributions you make each year to all of your traditional and Roth IRAs.
Also, starting in 2025, employees ages 60 to 63 will be able to make larger additional contributions to their 401(k) plans , with new limits set at either $10,000 per year or 150% of the standard limit of additional contributions – depending on which amount is greater.
Remember, the most effective retirement strategy is to contribute consistently and let your investments grow quietly over time.
Review your tax withholdings.
Of course, Tax Day won’t come for another few months. However, now is the time to review your tax withholdings and payments. If you have a major life event in 2024—like marriage, divorce, or a baby—you’ll likely want to adjust your withholding. Use the IRS Tax Withholding Estimator to effectively determine how much income tax to withhold.
Update your beneficiaries
As I mentioned above, if there have been major changes in your life, you will need to inform the beneficiaries of your finances accordingly. Write down the names of everyone included as beneficiaries of your bank accounts, retirement accounts, life insurance policies and annuities. The end of the year is the best time to take stock of anyone who may have entered or left your life and needs to be protected (or perhaps removed).
Reevaluate your budget
A budget is a living document. If you strayed from your 2024 promises this spring, it’s never too late to get back on track.
A good place to start is the 50/15/5 principle, which states that 50% of your after-tax income should go toward essential expenses (such as rent, utilities, groceries, etc.), with at least 15% of your income before taxes go toward retirement, and 5% should go into an emergency savings fund. The remaining 30% is for discretionary expenses such as travel and eating out. You can use this budget calculator to see how your savings and expenses stack up.
Set new financial goals
Regardless of the current state of your finances, it is important to be honest with yourself. Sit down and physically write down where you could improve your personal finances. You can even set a values-based budget . Consider: Do you have a debt repayment plan ? Do you need to limit your expenses ? Are you saving where you could invest, or vice versa ?
My number one tip is: be specific. Figure out what goals you’re trying to achieve, when you want to achieve them, and how much you want to save. For example, if you are saving for an upcoming trip, set aside a predetermined amount of money each month to reach your goal. Put plans into action to achieve your goals using tactics such as budgets , high-yield savings accounts , automatic savings contributions, and more.
Think about your priorities for the new year. You may consider investing in financial professionals to use as a sounding board, as their perspective can give you the push you need to create (and achieve) your short-term and long-term financial goals.