Year-End Financial Checklist: How to Get Your Finances Ready for 2025

Christmas holidays are the time to reflect on the past year and set goals. Before you organize a festive family dinner and exchange gifts with coworkers, take the time to prepare your finance for the new year to feel more secure. If you’re doing a financial review for the first time, worry not – our checklist will help you do it right. 

Why review your finances before the new year? 

Here are a few reasons why it is wise to evaluate your financial health just before the holidays:

1. Review your spending. In December, you can see where your money was going this year and reconsider your spending habits if necessary. Plus, analyzing expenses will help you set achievable financial goals for the next year. 
2. Plan your budget. If you plan to buy real estate, start saving for college, or boost your retirement savings, you need to assess your earnings and expenses and create a budget considering these financial goals. 
3. Manage taxes smart. As the tax season is approaching, you want to assess your finances proactively to avoid unpleasant surprises. 
4. Start the new year fresh. New Year is the time when people make resolutions to change their lives for the better, so use it to incorporate good financial habits. 

10 Steps for a year-end financial review 

Review last year’s spending

To create a reasonable budget for the next year, you need to know where your money is going. December is the ideal time to review your yearly budget and calculate how much you spent on housing, transportation, entertainment, education, personal care, and other categories. By analyzing your spending, you’ll know your spending patterns and habits. 

You can analyze your finances using a spreadsheet with earnings and expenses, or use an app to track your spending. Note how much you typically spend on each category to adjust your spending to meet the next year’s financial goals.

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Pay off credit card debt

Paying off high-interest debt is the first thing you should do for your financial well-being. As credit card debts accumulate, you’ll pay more interest over time. 

Make paying off high-interest debts your number-one resolution for the next year. Find a side hustle to earn extra cash, even if it’s driving for Uber, babysitting for your neighbors, or selling home crafts. If this is not an option for you (for example, you’re the main caregiver for your kids or you already have two jobs), cut expenses ruthlessly. It will be challenging, especially if you’ve been in debt for years, but what a relief will it be when you’re finally debt-free! 

Build an emergency fund

An emergency fund is the money you will use when unexpected events happen, such as job loss, medical issues, problems with a car, or urgent home repair. Experts recommend saving at least 3-6 months of basic living expenses in this fund. This includes your mortgage or rent, food, transportation, and healthcare. 

With savings that cover months of your living expenses, you’ll feel more financially stable in case of unexpected expenses and won’t have to use high-interest loans. Make sure to tune up the fund when your income and expenses grow. 

Set budget for the next year 

Create a yearly budget before the new year begins – it will give you clarity about how to spend your money from the onset. Firstly, calculate your planned monthly net income (your salary minus taxes and insurance). Based on last year’s budget analysis, plan how much you’d like to spend on each category (groceries, clothes, services, entertainment, etc.). 

Here are some tips for creating a small financial plan: 

1. Set realistic goals. Don’t plan to cut off the essential expenses, such as rent or food. Think realistically about what expenses you’re ready to cut and where you’re not willing to compromise. 
2. Plan any large expenses. If you want to start saving for college for your kids or buy real estate, ensure your budget reflects it. 
3. Review and adjust. Review your budget monthly to see whether you’re staying on track and make adjustments. 

Find ways to save more 

Boosting your savings can make a difference in your financial health. Here are some ways to minimize spending you might not have considered before: 

1. Cancel gym membership or yoga class and exercise at home
2. Cut down cable TV, streaming services, subscriptions, and consider changing mobile carrier
3. Prepare your lunches and make coffee at home 
4. Learn to cook simple and healthy meals to save on deliveries 
5. Review cash back options your credit cards offer and use them
6. Repair your clothes and buy second-hand clothes instead of new ones. 

On Christmas, people spend most of their holiday budget on gifts. You can cut off your gift expenses by suggesting a Secret Santa to family, friends, and coworkers. The rule is simple: each player buys one good present for another person in the group, but does it secretly. Thus, each participant gets a present, and you don’t have to buy gifts for everyone. 

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To streamline your Secret Santa exchanges, use our MySanta app. With the app, you can organize as many games as you like with various groups, save the result of the draw, and see gift progress. Plus, you will get gift suggestions to choose a present that your giftee will like! 

Try our MySanta app

You can create wishlists, add exclusions, and communicate with your gifree secretly. Moreover, there is an option to track gifts and ensure that everyone buys a present on time.

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Boost your retirement savings 

Make sure that you stay on track with your retirement savings. Contribute as much as you can to the retirement account, especially if your employer matches a certain amount. Ideally, you should contribute 15% of your gross income to your 401(k) monthly to get the most out of the plan. 

Remember not to exceed the $23,500 limit plus $7,000 if you’re 50 or older. The last day to contribute to your 401(k) this year is December 31, so don’t miss this date. Evaluate your investment strategy to see if it works for your goals and adjust it. 

Minimize your taxes 

Planning your taxes is the one of the key end-of year financial tasks. Understand your tax liability, and look for ways to minimize it. Consider the applicable tax deductions, such as using your car for business or student loan interest. Here are some more tips for tax planning for year-end: 

1. Maximize your 401(k) and other retirement plan contributions. 
2. Write off investment losses – if you have losing stock positions, you can sell them and offset gains to qualify for a tax deduction. 
3. Home office deduction – people who work at home can reduce taxable income if they use a part of their home as an office space.
4. Plan donations and gifts – generally, you can deduct up to 60% of your income via donations. 

Review insurance plans 

Review your life insurance, health insurance, homeowner’s insurance and other policies closely. If your life situation has changed, chances are that you might need more coverage in the next year. On the other hand, if you lost a stable income, consider more affordable policies. Study and update your insurance policies in advance to avoid unpleasant surprises. 

Review your HSA contributions as well to ensure they are enough to cover your medical expenses and reduce taxes. 

Check your annual credit report 

According to the Fair Credit Reporting Act, you can request a free credit report annually. For that, contact the Equifax, Experian, or TransUnion credit bureau. Reviewing this report regularly will help you maintain a good credit score and avoid identity theft. Check your report for any inaccurate transactions or unfamiliar accounts. You might also want to consider credit monitoring services to safeguard your accounts.  

Year-end ultimate finance checklist 

Here’s a complete checklist to monitor your finances and improve your financial well-being in the next year. 

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