Start the New Year Strong

As this year begins to wrap up, many of us are already anticipating the next one. But before we look forward, it's just as crucial to look back.

December is a great time to perform a "financial checkup" of the past year to understand what worked and what didn't. Then you can ensure you're setting yourself up for success in the new year.

Here are five steps to help with your end-of-year financial review.

Step 1: Review Your Budget

Look over your income and spending habits over the past year. Make sure you understand your cashflow and where you can improve. Were there months when you spent more than you made? If so, what were the causes? Is there room in your budget to save more or better prepare for costs that only come once or twice a year?

It's okay to have made mistakes. What's important is learning from them and improving your budgeting, spending and saving habits.

Step 2: Reduce Subscriptions

While you're reviewing your budget, you may discover monthly fees that had been going unnoticed. Maybe it was a free trial you forgot to cancel or a gym membership you haven't used in months.

Take this time to end any subscriptions you aren't using. If there are services or memberships you'd like to hold on to, you may be able to switch to a less pricey plan, which still saves you money each month.

Step 3: Review Your Free Credit Report

By law, you're allowed to request your credit report for free from the three major credit bureaus: Experian, Equifax and TransUnion. To do so, head to AnnualCreditReport.com.

The three bureaus report similar information, so it does not matter which one you contact, though it's a good habit to request from all three over the course of the year. (For example, you might request your credit report from Experian in April, from Equifax in August and from TransUnion in December.) You're also entitled to free weekly credit reports online.

Online you have your credit report, look for any errors or suspicious activity. If you find an error, you can simply dispute it. However, if you find accounts or addresses that you don't recognize, contact one of the bureaus to place a security freeze. That way, no new accounts can be opened under your name, giving you time to report the identity theft at IdentityTheft.gov and take steps for recovery.

Step 4: Check Your Investments and Insurance Plans

Many investment accounts, insurance plans and related accounts have yearly limits in place. Ensure you're getting the most bang for your buck before the year ends! Some examples include:

- Individual Retirement Account (IRA) - You have until Tax Day 2026 to contribute to your IRA for the 2025 tax year. The yearly contribution limit is $7,000 for those under the age of 50 and $8,000 for those age 50 and up.

- 401(k) - In 2025, the yearly contribution limit is $23,000. However, if you're between the ages of 60 and 63, you can contribute up to an additional $11,250. Check your employee plan and make sure you're taking full advantage of your benefits.

- Health Savings Account (HSA) - If you have a high-deductible health plan (HDHP), you might have a coinciding HSA. HSAs also have a yearly contribution limit, but the total balance rolls over to the next year. If you can max out your contributions, you'll have that money for healthcare costs in 2026.

- Flexible Spending Account (FSA) - Similar to an HSA, you might have this if you have a HDHP. However, the balance does NOT roll over to the next year. Use it or lose it! Be sure to set up any healthcare appointments or services you might need before the end of the year.

It's also a good time to review your existing insurance and savings plan to make sure they still fit your current lifestyle.

Step 5: Determine Your Goals

What are your priorities for the new year and beyond? Are you trying to save for a down payment or a new car? Are you planning to travel or spend more time with family and friends? Is marriage or kids in your near future?

No matter what, new goals and life changes also bring changes to your cash flow - but a little planning can go a long way. Be sure you're making reasonable goals you can actually achieve, and consider setting a timeline with specific deadlines to help keep you on track.

A strong foundation can make all the difference when heading into the new year - and if you need help or additional guidance, our financial experts are here for you!

We hope you have a happy New Year!

Sources:

https://finred.usalearning.gov/Money/NewYearChecklist

https://www.investopedia.com/personal-finance/how-conduct-financial-checkup/