The financial year is divided into different phases, each with its rhythm, opportunities, and challenges. But it is the final third of the year that usually attracts heightened attention. During this period, reviewing investment performance, rerouting financial resources, and making a final push toward goals should take precedence.

Why Review Your Finances Before Year-End

Reviewing financial goals during the final third of the year is strategic for several reasons:

1. To examine progress – The final third of the year is the perfect time to evaluate goal performance. By now, one should have a fair understanding of progress compared to projections.

2. To implement corrections – Evaluation provides an opportunity to make necessary changes to work toward year-end goals and plan for next year.

3. Plan charitable giving – Gifts must generally be made by December 31 to count for the current tax year, so late-year planning can help you give in a tax-efficient way.

4. Prepare for tax season – Late-year financial reviews can support tax planning and provide an opportunity to make important financial decisions that may lower one's tax liabilities.

How to Identify What Needs Refreshing

Acknowledging the need to revamp one's finances is a crucial first step. But identifying the specific areas that need refreshing is just as important. Here's how to do it.

· Evaluate spending – Examine spending habits to identify areas of overspending and opportunities to cut back.

· Assess the monthly budget – Is the budget realistic? Are there unexpected expenses consistently popping up that need attention?

· Check on debt – Do a quick review and plan a strategy to manage it better or pay it off as efficiently as possible.

· Review investments – Work with a financial professional to examine investments. Are they performing as expected, or do they need to be reallocated?

· Review insurance – Assess whether insurance policies align with current financial situation and future goals. Without adequate coverage, assets may be liquidated prematurely if a significant life event occurs.

Planning for Next Year

After reviewing the current financial situation and making necessary adjustments, it's time to plan for the next year.

· Set goals – Set clear goals for the next year. These goals should be specific, measurable, achievable, relevant, and time-bound (SMART).

· Make a new budget – Examine income, expenses, and financial goals, and plan for the next year.

· Plan for debt repayment – Create a detailed plan for repaying debt, considering methods such as the snowball or avalanche approach.

· Examine the investment strategy – Review and adjust as needed. Diversifying the portfolio, reassessing risk, or considering other investment opportunities may be appropriate.

· Increase the emergency Fund – An emergency fund is essential for unexpected expenses. With increasing costs, increasing one’s emergency fund is vital.

· Review insurance – Review insurance policies to determine whether they still apply to your situation.

Key Year-End Deadlines

· Required minimum distributions (RMDs) – Generally due by December 31. Your first RMD may be delayed until April 1 of the following year, but that means taking two distributions in one year.

· Charitable gifts – Gifts must generally be made by December 31. Beginning in 2026, non-itemizers may deduct up to $1,000 ($2,000 for joint filers) in cash gifts to qualified charities, while itemizers can deduct only gifts above 0.5% of adjusted gross income. Qualified charitable distributions (QCDs) from IRAs, for those 70½ or older, must also be completed by December 31.

· Arizona charitable tax credits – Donations to qualifying Arizona charitable organizations can generally be made through the April tax filing deadline and claimed for the prior year.

· Tax-loss harvesting and Roth conversions – Both must generally be completed by December 31 to apply to the current tax year.

· Retirement and health accounts – 401(k) contributions generally must be made through payroll by year-end, while IRA and HSA contributions can generally be made until the tax filing deadline. Check your FSA plan's deadline to avoid forfeiting unused funds.

· Medicare open enrollment – Runs October 15 through December 7 each year.

Year-End Planning FAQs

Do I have to take my RMD by December 31?

Generally, yes. The exception is your first RMD, which can be delayed until April 1 of the following year. If you delay, you'll take two RMDs in that year, which could increase your taxable income.

What's the deadline for year-end charitable donations?

For federal taxes, gifts must generally be made by December 31. For Arizona charitable tax credits, qualifying donations can generally be made through the April filing deadline and applied to the prior tax year.

The final third of the financial year is not a time to relax but a moment to reflect, correct, and plan. Reviewing your financial habits, adjusting where needed, and planning ahead can help you enter the new year with a clearer path toward your goals.