8 Things to Do Now to Get Your Finances Organized Before the Holidays
As the holiday season approaches, it's time to think beyond the gifts and festivities and look closely at year-end financial planning. Here are eight strategic planning tips for the fourth quarter.
1. Establish a Holiday Budget
Plan with Precision: A targeted budget allows for mindful spending on gifts, events, and seasonal investments without overshooting your plans. This isn’t about limiting enjoyment but managing it efficiently.
Allocate for Philanthropy: Charitable giving is integral to many holiday seasons. Work with your financial advisor to identify charities you’re passionate about, ensuring any donations align with your broader giving strategy and potentially optimize tax benefits.
2. Meet with Your Wealth Advisor for a Year-End Review
Gain Insights from Q4 Performance: Reviewing your portfolio’s performance in the final quarter provides insight into capital gains, losses, and opportunities for rebalancing.
Optimize Tax Efficiency: Now is the time to discuss tax loss harvesting, charitable donations, and contributions to any tax-advantaged accounts. You can maximize potential savings before the new year by aligning your holiday spending with your investment and tax strategies.
3. Strategize Large Gift Purchases and Experiences
Plan Thoughtful Investments: Gifts may extend beyond items to encompass experiences or even shared investments, such as fractional real estate or savings contributions. Setting a clear plan for these purchases or contributions ensures they support your broader financial goals.
Use Financial Tools to Track Spending: Consider working with an advisor who uses dedicated wealth management software to track your seasonal expenses against your overall financial picture. This level of insight allows for quick course correction if holiday spending exceeds expectations.
4. Automate Regular Expenses and Set Up a Year-End Cash Reserve
Set Up Auto-Payments and a Reserve Fund: Automating bills and essential expenses can prevent disruption in cash flow as holiday expenses come into play. Additionally, establishing a reserve for unplanned expenses means fewer surprises after January.
Prepare for Early Q1 Expenses: For many, January can bring significant payments, from quarterly taxes to property expenses. A reserve fund ensures these obligations are covered without disrupting your financial flow.
5. Optimize Credit Card Rewards and Cash-Back Opportunities
Leverage Card Benefits Wisely: High-tier credit cards often come with rewards that can add real value, from travel credits to luxury experience perks. Strategically utilizing these can elevate your holiday without impacting your net out-of-pocket expenses.
Earn While You Spend: Many luxury cards offer competitive cashback rates or rebates on specific purchases, such as travel or dining. These perks not only enhance holiday experiences but can also contribute to future financial goals.
6. Conduct a Subscription and Service Audit
Eliminate the Unnecessary: Often, households accrue numerous services or subscriptions. Now is an excellent time to evaluate these services for relevance and utility, streamlining or eliminating any that no longer serve a purpose.
Align Spending with Priorities: This small-scale audit can be satisfying and practical, aligning monthly expenses with your immediate lifestyle priorities and making room for new experiences or interests in the coming year.
7. Refine Your Estate Plan and Family Trusts
Coordinate Family Gifting with Long-Term Plans: The holiday season is an ideal time to consider gifting strategies within your estate plan. Financial gifts to family members or charitable contributions within trusts can provide substantial tax benefits and align with your legacy goals.
Update Beneficiaries and Legal Documents: Take this time to ensure that any changes within your family are reflected in your estate documents. Setting beneficiaries on accounts often means your loved ones can receive financial support immediately (rather than through probate). This minimizes potential future complications and ensures that your financial wishes are honored.
8. Plan for 2025 and Beyond
Establish a Forward-Looking Gifting Strategy: Consider setting up a holiday-specific fund or trust for future years, ensuring that your family’s holiday season continues to be supported. With such proactive planning, your financial strategies can have a long-term impact beyond this season.
Work with Your Advisor to Set Next Year’s Goals: Beyond the holidays, take advantage of the year-end as an opportunity to set your financial course for 2025. Your advisor can guide you in reviewing potential investments, tax strategies, and legacy planning, positioning you well for the future.
Peace of Mind for a Joyful Season
Before the busy chaos of the holidays, the end of the year can be a meaningful time to revisit your financial goals, ensure year-end strategies are in place, and plan for lasting family and charitable legacies. With intentional planning, you can greet the new year feeling organized and focused, enjoying the holiday season without the stress.
Here’s to a prosperous new year ahead!
