3 Financial Actions to Take (and Not to Take) at Year-End

As the year comes to a close, it’s the perfect time to reflect on your financial health and set yourself up for success in the year ahead.  Year-end often brings opportunities to maximize savings, minimize taxes, and ensure you’re on track with your long-term goals.  But just as important as knowing what to do is understanding what not to do to avoid costly mistakes.

Here are 3 financial actions to take—and 3 to avoid—as you wrap up the year.

1. Take: Maximize Tax-Advantaged Contributions

The end of the year is your last chance to make contributions to retirement accounts like a 401(k), Traditional IRA, or HSA (Health Savings Account) for the current tax year.  These contributions can reduce your taxable income while helping you save for the future.

• 401(k): Contribute as much as you can up to the annual limit.  For 2024, that’s $23,000 for those under 50, with an extra $7,500 allowed for those 50 and older.

• HSA: If you have a high-deductible health plan, contributions are tax-deductible and grow tax-free.

• IRAs: Depending on your income, Traditional IRA contributions may also lower your tax bill.

Why It Matters: Maxing out tax-advantaged accounts gives you a double benefit—tax savings now and potential tax-free growth for the future.

Not To Do: Don’t miss deadlines or assume you have more time.  December 31 is the cutoff for many retirement accounts, while others (like IRAs) may allow contributions until Tax Day.  Confirm the deadlines that apply to you.

2. Take: Review Your Spending and Budget

Take time to review your spending habits from the past year and evaluate your budget.  Look for areas where you can reduce expenses and redirect those funds toward savings, investing, or paying down debt.

• Track Your Progress: Did you stick to your financial plan this year?  Celebrate successes and pinpoint areas for improvement.

• Set a Budget for Next Year: Adjust your budget based on life changes, goals, or unexpected challenges.

Why It Matters: Year-end is a great time to reset and create realistic goals for the year ahead.

Not To Do: Don’t ignore lingering debt.  It can snowball quickly with high interest rates.  Prioritize paying off high-interest balances while maintaining contributions to savings.

3. Take: Harvest Tax Losses (If Applicable)

If some of your investments have underperformed, you may be able to use those losses to offset capital gains and reduce your tax liability.  This strategy, called tax-loss harvesting, allows you to sell underperforming assets and use the loss to your advantage.

• How It Works: Losses can offset capital gains dollar-for-dollar, and up to $3,000 can be used to offset ordinary income.

• Reinvest Smartly: Avoid the “wash-sale” rule by waiting at least 30 days before repurchasing the same investment.

Why It Matters: Tax-loss harvesting can help lower your tax burden while rebalancing your portfolio for the new year.

Not To Do: Don’t let taxes drive your investment decisions entirely.  Selling just to claim losses may derail your overall financial strategy.  Always consider long-term goals first.

Final Thoughts: Year-End with Intention

The end of the year is a powerful moment to take control of your financial future.  By focusing on maximizing savings, reviewing your spending, and taking advantage of tax strategies, you can start the new year with confidence and clarity.

At Kenwyck Capital, we’re here to help you close out the year strong and align your actions with your goals.  Let’s work together to make the year ahead your most successful yet.

Ready to take action before the year ends? Let’s connect.