It’s broken down into a few different areas, and we’re going to take turns going back and forth. This will probably be more of a conversation. Let’s start by talking about personal things.
Radon Stancil:
Think about things that are not necessarily money-related, although they could overlap. The first thing we like to do—and we do this ourselves—is look back and say, “What are some things we did really well the prior year?”
For us now, we’re looking back and saying, “What did we do really well in 2024?” You can do this whether you have a business, are still working, or are retired. Ask yourself, “What did I do in 2024 that I’m really proud of? What made me feel good?”
We encourage you to write these things down. You might think, “I’ll never forget this,” but three years later, you might not remember 2024 at all. Documenting this is an important exercise. For me, it’s so important that my personal goal is to journal and write these things down to help me reflect on what I’ve done well, what I need to work on, and what I’m looking forward to in the future.
Take some time to reflect on the past year. Then, think about what you’d like to accomplish in 2025. These could be personal things or milestone events, like a family vacation to a specific location, a home project, or supporting a charity. If you’re still working, maybe there are goals you’d like to achieve before retirement.
It could also be about learning something new or celebrating family milestones, like a grandchild graduating from college. Write these things down so you’re planning your year out and putting everything in place to ensure you don’t miss anything.
One thing we like to do with our team is recognize milestones. For example, we celebrate employees’ work anniversaries with a special lunch or something nice. You could think about doing something similar for your family members. These don’t have to be big gestures, but writing them down and planning ahead makes them happen.
Additionally, as you think about the year, consider how variable scenarios might affect your plans. This could bleed into financial planning. For example, if you’re planning a big project like a kitchen remodel or house upgrade, talk to your financial advisor. Planning in advance ensures that everything is done efficiently, avoiding last-minute surprises.
Now let’s talk about cash flow. It’s always important to revisit this throughout the year, especially at the beginning. Many people start the year with resolutions, and while we’ve all heard about resolutions, it’s key to make them attainable. Like we mentioned earlier, write them down.
Radon Stancil:
Cash flow is essentially understanding what’s coming in and what’s going out. Compare this year to last year. Are there changes to your income? Did you get a raise, switch jobs, or experience a decrease in income? If so, you may need to adjust your expenses or savings.
My wife and I recently reviewed our subscriptions. These days, with so many streaming services and subscriptions, costs can add up. We found a couple we weren’t using and decided to cancel them for next year. Simple budget cleanup items like this can make your cash flow more efficient.
Also, review your employee benefits. Did they change? Are you making more money that allows you to save more into retirement plans, or is your income decreasing? For example, contribution limits for IRAs, 401(k)s, and HSAs often change year-over-year. Make sure you’re aware of these changes.
If you’re saving for specific goals, like a vacation or a large purchase, write those down and plan for them. Similarly, if you’re charitably inclined, think about how much you’d like to give this year and whether strategies like donor-advised funds or qualified charitable distributions (if you’re of a certain age) make sense.
Next, let’s talk about assets and debts. Did you deplete any cash reserves this year for things like vacations or gifts? If so, consider replenishing those reserves. Talk to your advisor to avoid triggering taxable events if you’re selling assets to do so.
If you’re planning to buy or sell a business in 2025, consult an advisor before signing any agreements. There are strategies that can be implemented beforehand to make the process more beneficial.
It’s also a good time to review your investment strategy and risk exposure. For example, if the market performed well and your portfolio has grown, your allocation might be out of balance. Rebalancing ensures your investments align with your goals and risk tolerance.
Additionally, consider reviewing your debts. If you took out a mortgage during a time of high-interest rates, now might be a good time to explore refinancing options. Lastly, check your credit score. If you don’t already have a credit monitoring service, at least pull a credit report once a year to check for inaccuracies or fraud.
Radon Stancil:
Let’s move on to taxes. As tax season approaches, gather your documents, such as 1099s and W-2s, to prepare for filing. We’ll be releasing an episode soon with tips for streamlining your tax return process, so stay tuned for that.
Know your tax numbers for 2025. While tax rates haven’t changed, brackets have shifted slightly due to inflation. Contribution limits for retirement accounts also tend to adjust annually, so review those as well.
Another important tax strategy is Roth conversions. If your income decreased or you have extra deductions, converting funds from a pre-tax retirement account to a Roth IRA might make sense. Proper planning ensures you don’t miss opportunities.