The end of the year is always the best time to reflect and plan. I'd like to share several financial moves you should make before the new year in order to protect your wealth and hopefully grow your wealth in a risk-adjusted manner next year.
Those of us who invested in stocks, real estate, and many other asset classes this year should be feeling fortunate. Unfortunately, the good times seldom last forever.
Never forget the Armageddon days of the 1997 Asian Financial Crisis, the 2000 dotcom implosion, the 2008 global financial crisis, the 2020 COVID scare, the 2022 bear market, and the 2025 Trump trade wars throwing the economy into disarray. Those of you who haven't been investing at all better get ready to deploy capital when chaos returns, or else inflation will eat your wealth alive.
If you just started investing in the past year, lucky you! Don't worry. Your beat down will happen eventually. Losing money is an inevitably if you invest in risk assets. But like with most beat downs, things tend to get better over time.
10 Wise Financial Moves To Make
Here are the top 10 wise financial moves you should make this year. This goes a little beyond just maxing out your tax-advantage retirement accounts.
#1 Financial Move: Review your asset allocation
One of the most important financial moves is review your asset allocation. Setting and forgetting it is not a good strategy if you want to stay properly diversified.
For example, you might deploy a 50% equities, 50% bonds asset allocation. But if your equities climb 35% while your bonds decline 10%, and you want a 50/50 balance, you're out of alignment because your portfolio is now 60% equities and 40% bonds.
Investors should rebalance at least twice a year, no matter how small the rebalance is. Taking the time to rebalance helps focus your attention on your investments so they don't grow too far out of whack.
For my public investment portfolio, I'm following my Financial Samurai Asset Allocation Model for my age of 85% equities / 15% fixed income (all muni bonds and Treasuries). You can click on the post to see three other asset allocation models tailored towards your risk tolerance.
#2 Financial Move: Review your income and spending
You'll be surprised by how much you've spent and how much you THINK you've spent. Chances are high you're spending more than you realize, which is a detriment to your net worth building goal.
It's the same idea as withdrawing money from an ATM machine and wondering where all the cash went a couple days later. Tally up your total annual income and spending amounts. Then divide the figures by 12 to make the numbers more granular. Adjust your spending accordingly.
I'm more focused on making more money because there's only so much I can save. I've set detailed limits for spending on housing, food, transportation, entertainment, travel, etc, and rolled these figures up to a monthly figure I will not cross.
It's a thrill to stick to a set spending number while trying to earn as much as possible beyond that threshold. The spending number is high enough where I feel free, but responsible with my money.
Here's an example of a spending snapshot e-mail you'll receive each month if you sign up and link your accounts with Empower, a free wealth management app. Empower includes investing as a type of expense, which I like. It helps make spending on investments a positive.
#3 Financial Move: Declutter and donate to charity
Not only is donating good for people in need, you get to declutter your house and get a tax write-off up to $500 per donation without having to fill out a form to say where the item came from.
We all tend to accumulate a bunch of stuff over time. It feels fantastic to get rid of “excess inventory” so that people with low inventory can be helped. You can also donate other assets such as stocks, your car, and other valuable goods as well. Consider setting up a Donor Advised Fund.
Also consider decluttering your lifestyle. Our finances and lifestyles have a tendency to get more complicated with age. As you start to approach retirement, consider simplifying for less stress and greater happiness. Minimalism and early retirement go perfectly together.
When I last moved houses, I donated about twelve bags of clothing to Goodwill, The Salvation Army, and SF Smiles. It felt great to declutter and help others.
#4 Financial Move: Update your resume
Now is the time to update your resume and make sure it's the best looking document on your computer. You'll be surprised by how much you've accomplished over a year that you can add to your resume.
Make different versions of your resume for different types of industries or jobs you're eying. End of January through June is peak job hunting season.
I've updated my resume in anticipation of going back to work in 2024. The last time I updated my resume was in 2018 and a lot has happened since, including writing a national bestseller, Buy This Not That.
#5 Financial Move: Keep yourself and your family safe
I don't care if you are worth $5 million liquid. Some random illness could wipe you out if you don't have the appropriate insurance. Besides health care, please make sure your housing insurance, car insurance, and personal property insurance coverage are enough.
If you have lots of assets that go beyond what your housing and car insurance can cover, also get an umbrella policy. The linked article explains what an umbrella policy is and how much it may cost.
Finally, if you have debt and dependents, I suggest getting an affordable term life insurance policy. The closer to age 30 you can get a 30-year term policy, the better.
I recently raised my umbrella policy by $1 million due to the bull market. In addition, both my wife and I got matching 20-year term policies during the pandemic with Policygenius. After we did, we both felt a huge amount of relief. I thought I was priced out forever given I mistakenly only got a 10-year term policy at age 35, two years before I had my first child.
#6 Financial Move: Review your estate
Along the lines of financial moves to keep your loved ones safe, prioritize estate planning. At least have a will, or have an updated will if your financial circumstances have significantly changed.
You don't want to accumulate $20 million, die, and then cause your entire immediate and extended family to start a civil war because they don't know who is getting your millions. Money brings out people's evil side, especially for those who've never had a lot of money.
Do your heirs a favor and be organized. Create a death file and inform your beneficiaries where all of your most important documents and instructions are.
Make things as easy as possible for them to settle your estate. Here's a very helpful checklist on preparing for death – your loved ones will thank you.
When I first wrote this post, I only had a living will. Fortunately, my wife and I met with an estate planning attorney after our son was born and we got our estate plan in order. Not only did we set up revocable living trusts, we also have death files with detailed instructions.
#7 Financial Move: Forecast your future tax liabilities
I've already written an extensive piece about year-end tax moves to make. Now you must plan for your future tax liabilities by doing a pro formal analysis on your expected income and expenses.
If you invest in a lot of private funds, then take the time to estimate what your future distributions could be. Is a company your fund invested in potentially planning on IPOing? Is your fund in the last year of its estimated life cycle? If so, you may have much more investment income coming due, which may increase your overall taxes.
The greater your expected investment income, the less you should earn in consulting or day job income to reduce your tax liability. The more you should max out your Solo 401(k), SEP IRA, traditional IRA, and regular 401(k) as well. The deadline to contribute to the employee portion of the 401(k) is December 31.
I expect some capital gains taxes after selling stocks in 2023. In addition, one of my private real estate funds is in its last two years of its lifecycle. Therefore, I expected to receive some significant distributions. With a potential new consulting job, I will max out my Solo 401(k) and cut my FS salary.
# 8 Financial Move: Tie up loose ends
Use the end of the year to finish strong by completing all the things you should have completed already. The idea is to start the new year with the least amount of baggage possible so you have maximum momentum to achieve your new goals.
Have you used up all your gift cards and expiring points? Have you sold some stock losers for tax-loss harvesting? What about selling all your excess inventory of stuff? Maximize what you have and get rid of the baggage.
One of my loose ends is hanging up all our pictures and art at our new house. I'd like to decorate my office so the background looks good on video calls. My other loose end is getting birth and death certificates of my relatives to prove my children have Hawaiian ancestry.
# 9 Financial Move: Run your investment portfolio through a fee checker
Do you know why some money managers are so rich? It's because they charge a tremendous amount of fees. It's frustrating when your employer only offers actively run mutual funds with high fees. But you must continue to contribute as much to your pre-tax retirement accounts as much as possible.
At least once a year I run my investment portfolios through Empower's Retirement Fee Analyzer. Just link your investment accounts and click on the Investing tab on the top right and then click Retirement Fee Analyzer.
I've optimized my two portfolios so that my annual fee is estimated at only 0.18% compared to the benchmark of 0.5% due to my selection of ETFs, Index Funds, and specific stocks. The other cool feature is the Investment Checkup feature that shows your current vs. target allocation.
#10 Financial Move: Rekindle neglected relationships
Do you know what happens at the beginning of each year for working professionals? They get inundated with LinkedIn requests and messages from friends on LinkedIn, FB, and wherever. Why? Because more people are networking to find a new job.
This is problematic because people are only trying to connect with you when they need something. Although this is natural, it is not ideal. It's better to reach out to people throughout the year, check in, maintain relationships, and then potentially ask for help when help is needed.
Spend time looking through your connections you've neglected and at least drop a “happy holidays” or “happy new year” note and a brief summary of what you've been up to.
I'm going to spend at least two hours going through my connections and wish them well for the holidays. Life always gets busy and we tend to neglect the majority of people we know.
I used to send out over a hundred holiday cards a year when I was working. Today, that number is sadly under 20. People tend to help people who've been there over the long term.
BONUS: Work On Your X Factor
Your X Factor is something you do outside of work that could change your life for the better.
The world is chaotic but don't forget to set aside some quiet time to think big. I'm not talking about losing five pounds or getting a 10% raise that won't do much for your life.
Instead, I'm talking about potentially life-altering objectives. Things such as: moving to a different city/state/country, starting a business, finding the love of your life, getting that degree, and more.
I'm working on my X Factor by writing another book and building out my podcast. You never know what opportunities may arise from putting your creative work out there.
Visualize Success With Your Financial Moves
There is a reason why people create vision boards. They work. Everyone should visualize themselves 12 months from now in a more successful financial position. You're more likely to complete the financial moves above if you expect success.
For example, if you no longer want to do your craptastic job that requires no thinking, visualize yourself doing something new and exciting with a different company.
If you no longer want to be in a dull relationship with a partner who takes you for granted, visualize yourself taking an amazing vacation with someone else.
Tired of living paycheck-to-paycheck? Visualize yourself rocking an enormous bank account due to the positive steps you've taken to create wealth.
If you don’t believe in yourself you’ve already failed.
DIY Investor Free Tool
Regardless of whether you hire a financial professional or not, it's important to always stay on top of your finances. The way I've been doing so since 2012 is with Empower's free financial tools.
Empower easily enables me to track my net worth, highlight where I'm paying excessive portfolio fees, calculate my future retirement income, and so much more. Before Empower, I was just tracking everything with an Excel spreadsheet.
Investment Checkup free tool
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Happy Holidays to you and your family!
Thanks for the post. Some great tips here.
We want to transfer material wealth to our kids. We already have significant 529 accounts and brokerage accounts set up for them.
My concern is *how* to transfer it in a way that won’t ruin their motivation. My wife and I came from modest backgrounds, put ourselves through school and earned everything we have. Handing a few hundred $k to an 18 year old seems like a bad idea. A revocable (or irrevocable, depending) trust would allow us to distribute at different ages or for different expenses, such as a house.
I’ve been putting off seeing an estate lawyer for this stuff. This post motivated me to make an appointment.
A few other thoughts:
Tax modeling. I’ve found it useful to model my taxes each year, then I know how much capital gains I can take to minimize tax. Especially useful if you have your own biz and income is variable. For example, it’s good to know taking over, say, $50k in cap gains will push me over the 15% cap gains rate. There’s a tax nerd online who painstakingly creates an Excel model of the 1040 every year. Free to use (donations encouraged). I’ve found the model is very close to what my accountant produces each year. Your mileage may vary. Link: https://sites.google.com/view/incometaxspreadsheet/home/download
If you’re sitting on capital gains and have a low income year, you may be able to recognize some cap gain at 15% or even 0% tax rate. It’s a shame not to harvest cap gains at 0% so you can immediately rebuy for a higher basis.
Expenses. Absolutely found it helpful to track spending. I put everything on 1 cashback credit card. Once a month I download all spending into a csv file, then upload to Google sheets. I have a running tally and charts of all expenses in one place. The nice thing about it is if we’re running under budget I can splurge on something and don’t feel guilty. And if we’re over budget I can dial back a bit.
Been exploring more of your site Sam. Really great, quality content. Well done!
Transferring money to kids is definitely tricky. The older you do, the safer. I’ve got some posts on this topic somewhere!
Visiting an estate planning lawyer is well worth it. They’ll talk you through everything and provide suggestions.
Such a practical and actionable list. I have a bunch of takeaways that I’m going to work on to prepare for the new year. Thank you. Happy holiday.
I see my accountant every year in December just to make sure I have everything in order before the end of the year. Irrevocable trust was the highlight this year. If the Trump tax cuts expire the death tax rate is gonna be a huge concern for some of your wealthier readers. My accountant thinks trust lawyers will be booked a year out. I set up a revocable trust years ago but unfortunately it doesn’t shield your money from the death tax. My wife and I are in our early fifties so it’s kinda hard to know how much money we’re going to need for hopefully another 30 years or longer. We’re gonna set one up now with a small amount of money and hopefully we’ll have time to add what’s needed to stay under the threshold in the future.
Happy holidays! And thanks for posting this helpful list of year end reminders. I feel like I get more and more behind the ball each holiday season so it’s super helpful to revisit these. I can’t believe I used to have everyone’s gifts bought and wrapped by the second week in November. Now I’m scrambling to get things ordered before ship cutoffs and wrapped the night before lol.
I need to check my latest asset allocation and set goals for how I should invest and reallocate from now into q1. And I also need to revisit some estate planning items and expand on my death file. Thanks!
Pro Elf Tip: Stop wrapping christmas presents! We all have spent so much time wrapping just to have the little rascals destroy it all in a matter of nano seconds. I moved to a new model in which I put the presents in a reusable holiday decorated bag and cover the presents with holiday themed tissue paper. Clean up takes seconds, no more garbage bags filled with a million fragments of wrapping paper, and everything goes in a box and can reused the following year. Brilliant! I no longer dread the ritual masking of presents the nights before Christmas. Happy holidays!
Good tip on running portfolios through a fee checker.
Does the Empower feature work for any fund in any 401k portfolio?
Is it always free?
Reviewing asset allocation and rebalancing is such an important financial move! It’s so easy to forget to do this too. I’ve become reliant on calendar reminders to do things like this. Otherwise, many months or even years could go by and change the entire portfolio make up.
[…] Everybody is born with a different set of circumstances. I play tennis with members at my club whose children will all be set for life. I’m sure they’re all great kids, but what about the great kids who grow up in broken homes? Poverty is an extremely difficult situation to escape, no matter how much we say that education is the key to wealth. […]
Hi Sam,
Great article per usual.
How do you feel about Employee Stock Purchase Plans?
I have read plenty of articles raving about getting 15% off the low point in a quarterly or half year stock price with the general consensus being;
Max out your contribution ($25,000 or % of salary)
Sell ASAP
It seems more and more common to see lower (5%) discounts and/or rather then using a look back simply taking a % off the current purchase price…
So onto the questions!
Do you agree with the 15% + look-back being a no brainier? Then, taking it a step further, with these less advantageous plans; Should participating be a yearly move?
Take the free money.
Great article! I especially like the idea of rekindling relationships- something I need to work on. I will have to book mark your site and return often.
Great post! Something I will do before the year ends. Thanks much!
Hey, quick Qs on Personal Capital:
-You seem to like them a lot, do they fund you at all?
-Linking all my accounts seems kind of tedious, about how long does it take?
I’ve worked as a consultant for them for the past 12 months b/c I believe in the product. To me, it’s a no brainer b/c it’s free and helps empower individuals to get a hold of their finances. All it takes is effort to focus on one’s financial well-being since it’s free.
Check out: A New Adventure Begins: Consulting For A FinTech Company
It took about 10 minutes to link up all my accounts. But I have over 30 accounts to link up nowadays!
Great post. I need to work on asset allocation as I don’t have any fixed income. I figure I’ll wait a few more years and it’s okay to be 100% in equities in my investment accounts right now – but there is nothing scientific or even analytic about this approach – it just seems like a good idea. I also made the mistake this year of letting a manager run my old 401k and, comparing it to my Roth IRA (to which I can’t contribute anymore) that I manage myself,the 401k did about 20% worse. I learned a hard lesson there about trusting your money with other people.
I love taking a some quiet time between Christmas and New Years to reflect on next year’s goals. Last year I made a goal of connecting with 5 contacts per day, even if it was something really simple on social media. Although I didn’t have a 100% success rate, it went well.
Connecting with 5 contacts a day is aggressive since that is 1,600 a year! I would say connecting with 100 contacts a day would be a success!
Awesome list – helps put things in perspective. I am packing to leave SF – wish me luck!
You really going to North Carolina?! Tell me more, why!
Nice…the Tar Heel State! It’s great here – I hope you love it. Very different than big-city west coast, but many positives to living in NC.
Hi:
We have a few things in common. I’m a Content Strategist contractor in the Bay Area specializing in e-commerce. I use to get my health insurance through COBRA but it ended a few days ago, so now I’m on an Obamacare plan as of December 2014. I feel grateful for the Affordable Care Act (Obamacare). Before this law passed, health insurance carriers would discriminate against folks who have pre-existing conditions by jacking up monthly premiums if they granted them policies at all. I’m an avid follower of your blog by the way. Thanks for helping folks like me out.
Great list you have put together here. I well definitely be reviewing my income and tracking my spending much more closely throughout 2015 to make myself more profitable and increase my chances of achieving financial independence within four years before my 29th birthday.
Mr. Captain Cash
You’ll definitely be surprised by what I think is much more spending than you think you spent. It’s kinda scary. You looking at Fidi by 25?
Ahhhh updating the ole resume. Needs to happen even though I’m not actively looking. Bonus season is around the corner which means hiring season will soon follow!
Jay
Good luck w/ your bonus! If it’s big, I’m open to a nice steak dinner.
cheers
I really like the idea of rekindling relationships – this is something I’ll get cracking on right now just before Christmas, but will do throughout next year as well, so it doesn’t become just an annual thing.
I’m also with Sir Salty above – I like to reflect on where I’m spending my time, and try to recalibrate in line with my values and goals. Although rather than get too focused on the day-to-day balance which just tends to be frustrating to manage, I heard some great advice that you should try to find your balance over years, not days, which I think has some merit to it. This past year I’ve really focused on time with family and personal goals which I’ve been very happy with, but less on career. Next year I plan to focus much more on career and wealth, and hopefully when I reflect back 4 or 5 years from today, I’ll feel like I’ve achieved a pretty good balance overall.
Definitely a good idea to rekindle a relationship now in 2014, vs. in 2015. Even if the difference is just a week or two, it makes a psychological difference.
Thanks for your feedback re: Canadian real estate. You’d be surprised how many industry experts and even Bank of Canada believes that our housing is about 30% over valued. I sold my condo over a year ago due to the heavy construction building, you may be aware that Toronto is the #1 leading condo development city in North America! It’s absolutely insane. There are several real estate blogs that I follow all touting the same belief.
Anyways, I didn’t lose money, which is great, however, no one gets into real estate to essentially to break even. I’m kicking myself for not taking more risk with my investments and seeing how low interest rate returns are for GIC/CD under 3%, as the goal was to retain my wealth due to my belief that there were major market corrections underway. I still think this way, however, I’ll be looking for investment ideas with greater returns. My short term goals are approximately 700K net worth before or by 37 years old and an income producing business, preferably online. Hopefully invest in a house in the next year or so, until then, stay educated and keep reading amazing blogs like yours!
I know it’s not anywhere close to retirement levels, however, given I earn above average income and save much of it, this has helped propel my net worth above many of my peers I know in my age bracket. I’m all about sacrificing now and living like a queen later on!!
Thanks again for your valuable insight!!!
$700K net worth by 37 will be a nice chunky great achievement! From a US perspective, the Canadian housing market sure seems frothy. I’m aware of many pundits and blogs calling for the Canadian RE market to crash. What I do know is that bubbles and crashes last much longer than anybody realizes.
Nice and comprehensive list. Your expertise from the financial industry showing, no doubt.
I think I’m just going to make this one of my end-of-year checklists, as you call out highly valuable items to execute on that I don’t have a set schedule for (ex: update resume, rekindle relationships). And these are specific, actionable steps that we can take should we decide such rather than a generalized year-end list that you might see elsewhere.
Now I need to brainstorm on what my one big thing will be…
Let me know once you figure it out. The best is to just get going. You’ll wish in a year from now you started TODAY.
Hi!
First off, thanks for being candid and offering actual suggestions based on methods you’ve used that have boosted your net worth. I believe that many individuals are spending above their means and not preparing for a “rainy day” or retirement. I’m 32, female and saving well your recommended savings goal, I have now reached a comfortable 6 figure net worth (which I thought would only happen in my 40s). I’m waiting for the real estate correction in Canada as well as really considering a similar P2P lending models to yield a greater return, since I’m investing mainly in the CD equivalent or GIC across my entire portfolio. I’m staying semi-liquid so that I can invest as soon as the real estate market corrects…
Btw, what is your opinion on investing in gold, silver or commodities? Any additional thoughts/suggestions would be great!
Thanks again,
Msdriven2succeed
I do wonder whether the Canadian real estate market will ever have a massive correction like we had in the US. But your banks are much strong than ours during the time of the crisis, and you guys don’t have as much speculator fever, nor do you have the mortgage interest write-off.
Gold and silver are hedges against a market collapse given they are real assets, but they provide no income stream. They are just relative value plays which can be effective for short term hedges. I wouldn’t asset allocate anything more than 10% in this asset class. It’s speculative.
Good list of end-of-year to dos. While doing an annual review of income/expenses, I like to add consideration of how I’m spending my time in an average week. Think back about work, vs family, vs entertainment, vs exercise, vs friends, vs errands, vs commuting, etc. Try to map out my time, then reflect on whether that allocation is ideal.
It’s empowering to remember that I decide how I spend time. Usually it prompts me to carve out more downtime and unstructured time with family.
Excellent tip. Figuring out how much to allocate one’s time is definitely something I plan to do in 2015. I spent way too much time working on my consulting gigs, and didn’t have the discipline to cut things off when I reached my time limit.
Hey Sam, great article.
Just out of curiosity, how come you don’t publish your blog earnings as part of your passive income stream?
Even though its not entirely passive of course.
Because online income isn’t passive. It takes a lot of work. It also feels weird reporting my income. I’m of the stance that one should never real how much they truly make every year. Only bad things happen as a result, especially if the figure is higher than average or median.