It’s December! A time of sparkly decorations, gingerbread cookies, and last-minute shopping…
And for some of us, that inner thought, “Have we spent too much this year?” or “Isn’t there something I’m supposed to be doing with my finances before the year ends?”
I get it. The fact is - most of us were never taught how to handle money around the holidays - whether that’s setting a clear budget or taking advantage of year-end opportunities to save. This topic can feel tedious, confusing, and only relevant to rich people - you know, the ones with financial advisors and large portfolios.
But no matter your situation, the next few weeks are a golden opportunity to optimize your finances before Dec 31st. There are, in fact, a “few weird tricks” that will help your bottom line - and I’ll break it down for you below.
Think back to last December, when you had to do open enrollment. Did you set up a Flexible Spending Account (FSA)? And did you remember to put money in it? (Kudos!)
If so, you’ll need to use those funds before the end of the year, or you lose them. The good news is, you can buy common health-related items you know you’ll need later - like sunscreen, first-aid kits, hygiene products, even this light mask for acne or this hot stone therapy system. (“Surprisingly eligible”!) Check out the rest of the items at the FSAStore.com or get the full official list at FSAFeds.
*Some plans have a grace period or limited rollovers
Bottom Line: Use up your FSA dollars before year end
This tip is relevant for nearly everyone who has access to tax-advantaged retirement plans, (like a 401k or IRA) and has extra cash at the end of the year.
To maximize your future wealth, contribute up to the maximum allowable amount to your retirement accounts. 401k limits are $23,500, IRAs are $7,000, and HSAs are $4,300 (individual) or $8,550 (family). Each category has a catch-up amount for various ages too, explained here.
By maximizing your retirement contributions, you are ensuring your money has the maximum time to grow, setting you up for financial stability and success later in life. Financial freedom is about achieving your life goals—whether that is planning a dream wedding, saving for a big purchase, or being able to travel and indulge in your favorite activities once you retire. Having more money saved means you gain the confidence and control needed to afford the experiences you desire, like traveling with family or enjoying a comfortable retirement.
Bottom-Line: Maximize your retirement contributions
No, you don’t need to file your 2025 taxes now. BUT, if you have money in a traditional IRA (Individual Retirement Account), you might consider paying less taxes on it in 2026 instead of more in retirement. But you need to take action before Dec. 31st.
Does this apply to me? Did you make less money in 2025 than is typical (e.g. sabbatical or unemployed) or less than you expect to make in the future (most of us increase income as we progress in our career)? If so, you might consider moving some of your money from your traditional IRA into a Roth IRA (called a Roth conversion) before Dec. 31st. When you do this, you’ll have to pay taxes on it in April, but those taxes may be lower than if you do it later because Roth money is not taxed upon withdrawal in retirement. In other words - take the smaller hit now, and you’ll have more later!
But this still isn’t for everyone. Here are articles from Bank of America (basic), the IRS (intermediary), and TIAA (advanced) on how and when to do this so you don’t mistakenly pay a big tax bill in 2026.
Bottom-Line: Consider converting some or all of your traditional IRA to a Roth IRA
We all see dozens of year-end appeals from worthy causes. How can you do the most good for them, while getting a benefit yourself? It depends on if you itemize your taxes.
Most people take the Standard Deduction - a set amount the government allows you to subtract from your income, before it calculates your tax burden. In 2025, that’s $15,750 for single tax filers and $31,500 for married couples. (People over 65 have different rules)
In 2025, if you take a standard deduction then making a donation won’t give you a tax benefit. But in 2026, proposed changes may allow you to deduct some cash donations, up to $1,000 for singles and $2,000 for married couples. So, hold off giving for 2 weeks until after Jan 1. That means your favorite cause gets the same donation, and you pay less in taxes.
Some people itemize - i.e. they will claim a bunch of deductions (On things like medical bills, state/local taxes, mortgage interest) to reduce their taxable income by more than the Standard Deduction amount.
If you itemize, you should make your charitable contributions before Dec. 31st for it to reduce your April tax bill. If you itemize, here are some smart strategies:
Finally - there will be some tax law changes for transactions you make in 2026 (Which will impact what you pay in 2027). Small gifts won’t count, as you can only deduct donations worth more than .5% of your Adjusted Gross Income. And there will be a cap on all itemized deductions. So 2025 is a special year - give now!
Bottom-Line: If you take the Standard Deduction, consider giving in 2026. If you itemize, give before Dec. 31st.
If you don’t want to even think about taxes until April 15th (I get it but don’t wait too long), the end of year lull can be a great time for taking stock and planning for a smoother, wealthier 2026:
It’s a crime that we’re not taught about financial wellness in school - causing so many people to make mistakes or miss opportunities that others grab. In this season of giving, you CAN (and should!) give to others - while giving to yourself.
If you find yourself overwhelmed, staring at acronyms and debating tax deadlines, remember: Financial Butlers excels at helping people organize and optimize their personal finances. Think of us as your trusted guide, helping you cut through the jargon and create a custom plan that guarantees improvement and results.
Book a FREE Discovery Call to start the new year with clarity and control.
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