7 smart money moves to make before the end of the year

As December approaches, many individuals are focused on holiday shopping and setting New Year's resolutions, but it's also crucial to take stock of your financial situation as the year comes to a close. Regularly evaluating your investment and savings objectives can help ensure that you stay on track. Current, a consumer fintech banking platform, has identified seven financial strategies to consider before the end of the year.

First, it's advisable to review your 401(k) contributions before December 31. This assessment is vital to ensure you are contributing enough to maximize any employer match, as recommended by Kristen Kuzma, a wealth manager at Fairway Wealth Management. For 2026, the maximum contribution limit for 401(k) plans is set at $24,500, with individuals aged 50 and older allowed an additional catch-up contribution of $8,000. Furthermore, those between 60 and 63 can contribute an extra $3,250. Even if you cannot contribute the maximum amount, it's essential to at least meet the threshold for your employer’s matching contributions. If you anticipate a salary increase next year, this is also a good time to consider raising your contribution rate.

Next, if you have a flexible spending account (FSA) through your employer, you should verify whether you need to use your remaining funds by December 31. Typically, FSAs operate under a use-it-or-lose-it policy, meaning any unspent balance will be forfeited unless your plan allows for rollover. To ensure you don’t lose out on your funds, check your specific plan's terms. Eligible purchases can include items like sunscreen, pimple patches, and fitness trackers, making it practical to spend down any remaining balance.

Another important financial move is to consider tax-loss harvesting as the year ends. This strategy involves selling investments that have decreased in value to offset capital gains from other investments, potentially reducing your tax liability. Caitlin Frederick, a partner and director of financial planning at Ullmann Wealth Partners, emphasizes the importance of reviewing your portfolio during December. While selling losing investments might seem counterintuitive, it does not mean you must exit the market entirely. Frederick suggests that you can buy substitute positions to maintain market exposure while benefiting from the tax loss. Tax-loss harvesting can be complex, so consulting with a tax professional before making any decisions is advisable.

Additionally, if you qualify based on income, consider making a Roth IRA contribution or conversion before the year ends. Contributions to a Roth IRA offer tax advantages for retirement savings, and conversions typically need to be completed by December 31 to be counted for the current tax year. For 2026, single filers earning less than $153,000 and joint filers earning under $242,000 can contribute up to $7,500 ($8,600 for those aged 50 and older). High earners who exceed these income limits might explore the backdoor Roth IRA strategy, which involves making a non-deductible contribution to a traditional IRA and then converting it to a Roth IRA.

Another tip is to consolidate your bank accounts if you have more than you actively use. Streamlining your checking and savings accounts can simplify your financial management as you head into the new year. Over time, people often accumulate multiple accounts without realizing it, which can complicate financial tracking. Frederick recommends consolidating accounts where possible, particularly if you have a traditional savings account with a lower interest rate compared to high-yield alternatives.

As the year wraps up, it’s also a good time to revisit your budget. Assess whether your current budget aligns with your income and financial goals by reviewing your spending in categories such as dining, entertainment, and transportation. If you anticipate changes in income or expenses in the upcoming year, incorporate these factors into your budgeting plans.

Lastly, your investment strategy should be reviewed periodically, especially as the year comes to a close. Ensure that your investment asset classes and funds still align with your financial goals, and consider rebalancing your portfolio if necessary. Rebalancing involves adjusting your investments to return to your desired asset allocation, ensuring that your portfolio remains aligned with your objectives.