Ep. 184 - GET 2025-READY - MUST-DO YEAR-END MONEY TIPS!

In this episode, financial wellness strategist Marie Jo Caesar guides viewers through a thorough year-end financial review. She emphasizes the importance of assessing one's 2024 financial performance, setting SMART goals for 2025, and implementing systems to ensure ongoing financial success. The episode is packed with actionable steps and statistics to help viewers conduct an effective financial review, with additional resources like an interactive checklist available on her website.

*KEY TAKEAWAYS*

⭐ Comprehensive Year-End Financial Review
Gather all financial documents, calculate net worth to track progress, and assess financial behavior and goal achievements. Set actionable SMART goals for 2025, focusing on budgeting, savings, debt repayment, and investment strategies.

⭐ Debt Management and Fee Optimization

Prioritize high-interest debt using effective strategies like snowball or avalanche methods. Regularly review accounts to avoid unnecessary fees and maintain credit utilization below 30% for a strong FICO score.

⭐ Optimizing Investments and Economic Awareness
Evaluate investment performance, adjust portfolios, and leverage tax-efficient strategies like maximizing retirement contributions. Stay informed on economic trends to make proactive decisions and implement systems for real-time financial tracking and ongoing education.

*KEY MOMENTS IN THIS EPISODE* 

00:12 Importance of Year-End Financial Review

02:17 Key Areas to Assess in Your Financial Review

05:03 Gathering Financial Documents and Calculating Net Worth

06:00 Reviewing Income, Expenses, and Debt

07:40 Evaluating Savings and Investments

08:43 Reflecting on Financial Goals and Habits

12:20 Planning for 2025: Setting SMART Goals

15:28 Creating a Budget and Debt Repayment Plan

22:42 Implementing Systems for Financial Success

37:19 Conclusion and Next Steps

✨ Download Your Free Checklist:
Get my interactive Year-End Financial Review Checklist to simplify your financial review. Track your progress, plan for 2025, and set yourself up for financial freedom. Download it here: mariejocaesar.com/year-end-financial-checklist

Chapters

• 0:12 The Importance of a Year-End Money Review
• 5:03 Assessing Your 2024 Financial Performance
• 11:30 Planning for 2025
• 17:16 Implementing Systems for Ongoing Financial Success
• 27:41 Track Your Net Worth
• 31:23 Adjust Goals Regularly for Financial Success
• 39:05 Download Your Free Year-End Financial Review Checklist

Transcript

Ep. 184 - HOW TO CONDUCT A YEAR-END MONEY REVIEW - PRE-2025 CHECKUP

 Good morning, good afternoon, and good evening wherever you are. As we approach the final months of 2024, it's time to take stock of your financial journey this year. A year-end money review is not just about crunching numbers. It's an opportunity to reflect on our financial decisions, celebrate our wins, and course-correct where needed. This pre-2025 checkup is especially important as we navigate an ever-changing economic landscape. 

Recent data from the Federal Reserve's 2023 Survey of Household Economics and Decision-making shows that 37 % of Americans would struggle to cover an unexpected $400 expense. This statistic underscores the importance of regular financial check-ins. Whether you've been diligently tracking your finances all year or just getting started, this episode will provide you with actionable steps to conduct a thorough year-end money review. 

For those tuning in to my channel for the first time, I am Marie Jo Caesar, your financial wellness strategist dedicated to helping you take control of your money from the inside out.

As we discussed in a recent episode titled 10 Budget Friendly Holiday Hacks for Financial Freedom, the holiday season can put significant strain on our finances. Today's discussion on conducting a year-end money review complements those strategies perfectly. By assessing your financial health now, you will be better prepared to implement those holiday budgeting tips and start the new year on solid financial footing.

We will cover three key areas: assessing your 2024 financial performance, planning for 2025, and implementing systems for ongoing financial success. By the end of this episode, you will have a clear roadmap for evaluating your financial health and setting yourself up for a prosperous new year.

Remember, this review is not about judgment. It's about awareness and growth. 

To help you implement the strategies we will discuss today, I have created a special year-end financial review checklist just for our listeners. This comprehensive checklist will guide you through each step of your financial review, ensuring you don't miss any crucial aspects of your financial health. It includes sections for assessing your 2024 performance, planning for 2025, and setting up systems for ongoing success. 

You can download this free checklist from our website at mariejocaesar.com/yearend-financial-checklist. I will remind you about this valuable resource at the end of our episode. So don't worry if you can write it down; the link will be in the description. 

You will notice that throughout today's episode, I am sharing quite a few statistics and recent data points. There's an important reason for that. When collecting a yearly money review, it is valuable to understand how your financial situation compares to broader trends and averages. These numbers are not meant to make you feel behind or ahead. They are simply benchmarks to help you assess your financial health objectively and identify areas where you might want to focus your attention in the coming year. As your financial wellness strategist, I believe in making decisions based on facts rather than fear or assumptions. These statistics help paint a clear picture of the current financial landscape and can inform your planning process. However, remember that your financial journey is unique, and these numbers are just reference points, not goals that you must achieve.

Now, let's dive into our first key area, assessing your 2024 financial performance. 

To begin your year-end money review, gather all your financial documents. This includes bank statements, credit card bills, investment account statements, and any other relevant financial records from the past year. Having these at your fingertips will make the process smoother and more accurate.

Start by calculating your net worth. Your net worth is the difference between your assets, what you own, and your liabilities, what you owe. Compare this figure to last year's net worth to see if you've made any progress. Remember, small improvements are still wins. If your net worth has decreased, don't panic. Use this information as motivation to make positive changes in the coming year.

Next, review your income sources. Did you meet your income goals for the year? If not, consider what factors contributed to the shortfall. Perhaps you needed to negotiate a raise, or maybe you needed to seek additional clients or explore new income streams. If you have exceeded your income goals, congratulate yourself and think about how you can replicate or build on that success.

Now, let's look at your expenses. Break them down into categories, such as housing, transportation, food, entertainment, and debt payments. Compare your actual spending to your budget. If you had one, look for areas where you consistently overspent or underspent. This analysis can reveal spending patterns you might not have been aware of. Pay special attention to your debt. Have you made progress in paying it down? According to the Federal Reserve Bank of New York's quarterly report on household debt and credit, total household debt reached $17.29 trillion with a T in the third quarter of 2023. So, if you are carrying high-interest debt, prioritize paying it off in your 2025 plan. 

 Examine your savings rate. Financial experts often recommend saving at least 20 % of your income. How did you measure up? Don't be discouraged if you fall short. The important thing is to identify areas for improvement.

According to a 2023 survey by Bankrate, only 23 % of Americans have enough savings to cover six months of expenses. Another thing that you must do is review your investment. How did your portfolio perform compared to relevant benchmarks? Did you make any significant changes to your investment strategy? Remember, investing is a long-term game, so don't get too caught up in short-term fluctuations. The S&P 500, a common benchmark for U. S. stocks, has averaged an annual return of about 10 % over the long term, but individual year performance can vary widely. Consider your financial goals from the beginning of 2024. Did you achieve them? If not, what obstacle got in your way? Understanding these challenges will help you set more realistic goals for the coming year. And lastly, reflect on your financial habits and behaviors. Did you make progress in areas like budgeting, saving, or investing? Celebrate your successes, no matter how small they are. Recognizing your achievements can motivate you to continue making positive changes. 

Remember, this assessment is not about perfection. It's about gaining a clear picture of your financial situation. Be honest with yourself, but also be kind. Every financial decision you made this year was a learning opportunity.

In fact, in his book, The Psychology of Money, Morgan Housel writes, "The highest form of wealth is the ability to wake up every morning and say, I can do whatever I want today." As you assess your 2024 performance, consider how your financial decisions have moved you closer to or further from this ideal of financial freedom.

As we discussed in last week's episode on holiday budgeting, it is key to have a clear understanding of your overall financial picture before diving into seasonal expenses. This year-end review provides the perfect opportunity to do just that. By assessing your 2024 performance now, you will be better equipped to make informed decisions about your holiday spending and avoid the financial stress that often comes with the season.

For example, if you identified that you've made significant progress in paying down debt this year, you might decide to allocate a bit more to your holiday budget as a reward for your hard work. On the other hand, if you've fallen short of your saving goals, you might choose to implement more of the budget-friendly holiday hacks we discussed last week to keep your spending in check. Remember, the goal of this assessment is not to make you feel guilty about past financial decisions but to empower you with knowledge. By understanding where you stand financially, you can make more informed choices about your spending, saving, and investing in the coming year. 

As you complete this assessment, take note of any patterns or trends you observe. Are there certain months where you tend to overspend? Are there areas of your budget that consistently cause stress or difficulty? This insight will be valuable as we move into planning for 2025 in our next section. 

With a clear understanding of your 2024 financial performance, it's time to look ahead and create a solid plan for 2025. This planning phase is where you will translate the insights from your assessment into actionable goals and strategies. 

Start by setting SMART financial goals for 2025. SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound. Instead of a vague goal like" save more money," aim for something specific like "save $5,000 for an emergency fund by December 31st, 2025". This approach makes your goal clearer and easier to track.

Consider setting goals in various financial areas. I identified six areas, and we will start with budgeting. If you struggled with overspending in certain categories, set a goal to reduce those expenses by a specific %age. For example, reduce dining out expenses by 20 % in 2025.

2. Saving. Determine how much you want to save and for what purpose. This could include short-term savings for vacation or long-term savings for retirement. A good starting point is to aim to save 20 % of your income. 

3. Debt repayment. If you have high-interest debt, make a plan to pay it off. You might set a goal to pay off a specific credit card or reduce your overall debt by a certain amount. For instance, pay off $10,000 of credit card debt by the end of 2025. 

4. Investing. Consider increasing your investment contributions or diversifying your portfolio. A goal might be "increase 401k contributions by 2% in 2025 or invest $2,000 in a low-cost index fund by June 2025."

5. Income. Set targets for increasing your income, whether through a raise side, hustle, or new business venture.

For example, negotiate a 5% raise by Q2 2025 or start a side hustle generating $500 per month by December 2025. 

6. Financial education. Commit to improving your financial literacy. This could involve reading a certain number of finance books or attending workshops. A goal might be to read one personal finance book per quarter in 2025 or attend two financial planning seminars. by the end of the year. 

Once you've set your goals, create a budget that aligns with them. Your budget is your financial roadmap for the year. Allocate your expected income across various categories, ensuring you are prioritizing your goals. 

If budgeting has been challenging in the past, consider trying a different method. The 50/ 30/ 20 rule can be a good starting point. 50 % of your income goes to needs, 30 % to wants, and 20 % to savings and debt repayment. Alternatively, zero-based budgeting, where you allocate every dollar of income to a specific purpose, can help ensure you are making the most of your money. 

Next, create a debt repayment plan if necessary. The two popular methods are the debt snowball, where you pay off the smallest debt first for psychological wins. The other one is a debt avalanche that focuses on the highest-interest debt first to save money over time. Choose a method that aligns best with your financial situation and personality. 

 A saving strategy. Automate your savings if you have not already done so. Research shows that automatic savings plans can increase the likelihood of reaching savings goals. Consider setting up separate savings accounts for different goals to help you track progress more easily.

Review your insurance coverage. Are you adequately protected against potential financial setbacks? Consider life, health, disability, and property insurance. Having proper coverage can prevent a single event from derailing your financial progress.

According to Limerick's 2023 Insurance Barometer Study, 106 million Americans are uninsured or underinsured when it comes to life insurance. 

Another one is a plan for taxes. If you received a large refund or owed a significant amount this year, adjust your withholdings. Aim to break even or receive a small refund. Also, consider tax advantage savings and investment options like 401k and IRA to reduce your tax burden. For 2024, the contribution limit for 401k plans is $23,000, with an additional $7,500 catch-up contribution allowed for those 50 and older. 

Create an investment plan. If you are new to investing, educate yourself on the basics and consider starting with low-cost index funds. If you are a more experienced investor, review your asset allocation and rebalance if necessary. According to a 2023 Gallup poll, 61 % of Americans own stocks, either directly or through mutual funds or retirement accounts. 

Don't forget about estate planning. Ensure your will is up to date and consider creating or updating other documents if Like a living will or power of attorney. A 2023 survey by caring.com found that only 34 % of Americans have a will or other estate planning documents. 

And lastly, build in some flexibility. The economic landscape can change rapidly, as we've seen in recent years. Your plan should be robust enough to withstand some turbulence. Remember, Planning is not just about numbers. It's about aligning your financial decisions with your values and long-term vision. As author Vicky Robin, I like Vicky Robin's writing states in Your Money or Your Life, "Money is something we choose to trade our life energy for". So, make sure your 2025 plan reflects what truly matters to you.

As we discussed in last week's episode on holiday budgeting. It is important to plan for seasonal expenses well in advance. When creating your 2025 financial plan, consider allocating funds specifically for holiday spending. This proactive approach can help you avoid the financial stress that often comes with the holiday season. 

For example, if you know you typically spend around $1,000 on holiday gifts and celebrations, consider setting aside about $85 each month throughout the year. This way, when the holidays roll around, you will have a dedicated fund to draw from, reducing the likelihood of overspending or going into debt. 

Another important aspect of planning for 2025 is to anticipate potential financial challenges or opportunities. Are there any major life events on the horizon, such as a wedding, the birth of a child, or a planned career change? Factor these into your financial plan. If you're expecting a significant expense, start saving for it now. If you're anticipating a boost in income, plan how you will allocate those extra funds to support your financial goals. 

Don't forget to plan for fun and personal development as well. So, while it's important to be financially responsible, it is equally important to allocate resources for things that bring you joy and help you grow. This might include budgeting for a hobby, planning for a vacation, or setting aside funds for personal development courses.

Lastly, consider creating a vision board or a written statement of your financial goals for 2025. This visual or written representation can serve as a powerful motivator throughout the year, reminding you of what you are working on when faced with financial decisions.

Now, let's address the second main point of today's discussion. 

 Implementing systems for ongoing financial success. Creating a plan is an excellent start, but the key to financial success lies in consistent execution. Let's explore how to implement systems that will keep you on track throughout 2025 and beyond.

First, establish a regular review schedule. Monthly client check-ins are ideal for most. During these sessions, compare your actual income and expenses to your budget. Review your progress concerning your goals and make any necessary adjustments. These frequent reviews help you catch and correct small issues before they become big problems.

Consider using financial tracking tools to simplify this process. Apps like Mint YNAB, you need a budget, or Personal Capital can automatically categorize your transactions and provide visual representations of your financial data. Choose a tool that fits your needs and preferences. Remember, the best system is the one you will actually use. According to a 2023 study by Plaid, 87 % of Americans use fintech apps to manage their finances. 

Set up automated systems wherever possible. This could include automatic bill payments to avoid late fees and maintain a good credit score. It could be automatic transfers to savings accounts on payday. It could also be automatic investment contributions to your retirement accounts or other investment vehicles. 

Remember, automation reduces the mental load of managing your finances and helps ensure you are consistently working on your goals. A 2023 study by the National Automated Clearinghouse Association found that 93 % of American workers are paid by direct deposit, making it easier to automate savings and bill payments.

I told you I like my facts. Implement a system for managing financial documents. This could be a physical filing system or a digital one using cloud storage. Organize documents by category. For example, taxes, investment, and insurance are okay, and make sure that they are up to date. Having an organized system will make future reviews much easier and ensure you have important documents at your fingertips when needed. Consider using secure digital storage solutions, as 68 % of Americans Now prefer digital financial services, according to a 2023 survey by J. D. Power. 

Create an accountability mechanism. This could involve sharing your goals with a trusted friend or family member, joining a financial accountability group, or working with a financial coach. External accountability can provide motivation and support when you face challenges. A study published in the American Society of Training and Development found that people are 65 % more likely to meet a goal after committing to another person. 

Develop a system for continuous financial education. Set aside time each week or month to read financial articles, listen to podcasts like this one, or watch educational videos. Stay informed about changes in tax laws, investment options, and economic trends that could impact your financial plan. According to a 2023 FINRA study, individuals with higher financial literacy are more likely to engage in positive financial behaviors.

Implement a reward system for reaching milestones. Celebrating small wins along the way can help maintain motivation. For example, you might treat yourself to a nice dinner When you pay off a credit card or reach a savings goal. Research in behavioral economics suggests that immediate rewards can help reinforce positive habits. 

So, create a system for tracking your net worth. Update this figure quarterly or semi-annually. Seeing your net worth grow over time can be a powerful motivator to stick to your financial plan. According to the Federal Reserve's 2023 Survey of Consumer Finances, the median net worth of U. S. households was $192,900.

Establish a method for handling windfalls or unexpected expenses. Decide in advance how you will allocate any unexpected income, like a bonus or tax refund, between savings, debt, repayment, and discretionary spending. Similarly, have a plan for covering unexpected expenses without derailing your overall financial strategy. A 2023 Bank Rate Survey found that only 44 % of Americans could cover a $1,000 emergency expense from savings. 

Implement a regular credit report check. You are entitled to one free credit report from each of the three major bureaus annually. Stagger these checks throughout the year to keep a consistent eye on your credit health and catch any errors or fraudulent activities early. According to the Federal Trade Commission, 1 in 5 Americans has an error on their credit report that could affect their credit score. 

Create a system for reassessing your financial goals. Life circumstances change, and your financial goals should adapt accordingly. Schedule a mid-year review to ensure your goals still align with your life situation and values. Okay, a 2023 Fidelity Study found that 67% of Americans who set financial resolutions achieve them or make progress toward them. This statistic underscores the importance of not only setting goals but also regularly reviewing and adjusting them.

To make the most of this finding, consider implementing a quarterly goal review process. During these reviews, ask yourself: Am I on track to meet my goals? Have my priorities or circumstances changed since I set these goals? Are there any new opportunities or challenges I need to account for? Do I need to adjust my strategies or timelines? This regular reassessment helps ensure your financial plan remains relevant and achievable. It also allows you to celebrate progress and make course corrections as needed. Remember, the key to successful goal achievement is not just setting ambitious targets. It is about maintaining flexibility and persistence in pursuing them. 

For example, if you set a goal to save $5,000 for an emergency fund this year but received an unexpected bonus, you might decide to increase your savings target. Conversely, if you face an unforeseen expense, you might need to adjust your timeline or savings strategy. 

Regularly reviewing and adjusting your goals will make you more likely to stay motivated and make meaningful progress on your financial objectives. This approach aligns with the flexible mindset we discussed in a recent episode on holiday budgeting, which is being adaptable while still maintaining focus on your overall financial well-being.

Implement a system for managing and minimizing fees. This includes bank fees, investment fees, and subscription services you may no longer use. According to a 2023 bank rate survey, and I'm laughing because I like my stats, the average monthly fee for a checking account is $12.58, but 53 % of non-interest checking accounts are free. So, regularly review your accounts and subscriptions to ensure you are not paying unnecessary fees. 

Set up alerts for your accounts. Most banks and credit card companies allow you to set up notifications for large purchases, low balances, or unusual activity. These alerts can help you stay on top of your finances and catch potential issues early. Another 2023 ABA survey found that 70 % of Americans use mobile banking apps, making setting up and managing this alert easier. 

Create a system for managing your credit utilization. Credit utilization, or the amount of available credit you are using, accounts for 30 % of your FICO score. Aim to keep your utilization below 30%. Consider setting up automatic payments to pay off your credit card balance in full each month. According to Experian, the average credit utilization rate in the US was 25 % in 2023. Implement a strategy for tax-efficient investing. This might include maximizing contributions to tax advantage accounts like your 401k plan and IRAs. According to a 2023 Vanguard study, tax-efficient investing strategies can boost after-tax returns by up to 1. 5 % annually. 

Develop a system for staying informed about economic trends and policy changes that could affect your finances. This might include setting up new alerts for topics like inflation rates, interest rate changes, or new tax laws. Understanding these broader economic factors can help you make more informed financial decisions. 

Create a process for regularly reviewing and optimizing your financial products. This includes checking if you are getting the best interest rates on your savings account, the most competitive fees on your investment accounts, and the best rewards on your credit cards. Many people leave money on the table by sticking with suboptimal financial products out of habit or convenience. 

Implement a system for tracking your spending in real-time. While monthly reviews are important, keeping a daily or weekly log of your expenses can help you stay more consistently aligned with your budget. Many budgeting apps allow you to input expenses as you make them, giving you an up-to-date picture of your spending. 

Establish a routine for discussing finances with your partner or family members. Regular financial check-ins can help ensure everyone is on the same page and working on shared goals. These discussions can also be an opportunity to model good financial habits for children or younger family members. 

Create a system for managing and updating your passwords for financial accounts. With cyber security threats on the rise, it is critical to maintain strong, unique passwords for each of your financial accounts. Consider using a reputable password manager to help you create and store complex passwords securely. 

Remember, the goal of these systems is not to make your financial life rigid or inflexible. Instead, they are designed to create habits and routines that make good financial management second nature. As James Clear writes in Atomic Habits, "You do not rise to the level of your goals; you fall to the level of your systems." 

By implementing these systems, you are not just planning your financial success; you are creating an environment where financial success becomes a default outcome. These habits and routines will carry you through 2025 and set a foundation for long-term financial wellness. 

As we conclude our journey through the year-end money review process, remember that this exercise is more than just a financial checkpoint. It is an opportunity for growth, for learning, and for empowerment. By assessing your 2024 performance, planning for 2025, and implementing systems for ongoing success, you are taking control of your financial narrative.

Renowned personal finance expert Suze Orman once said, "The key to financial freedom and great wealth is a person's ability or skill to convert earned income into passive income and or portfolio income." Your year-end review and Planning are the first step in this conversion process, setting the stage for long-term financial independence. 

As you move forward with your financial plans for 2025, remember that progress, not perfection, is a goal. Every small step you take to achieve better financial management compounds over time, creating a significant impact on your financial well-being. 

Reflecting on one of my recent episodes titled How to Budget for the Holiday, remember that the strategies we discussed for managing seasonal expenses are part of a larger financial picture. By conducting this comprehensive year-end review, you are setting yourself up not just for a financially savvy holiday season but for a year of intentional and strategic money management. 

Now, it's time to put what you've learned into action. To help you get started. I've created an interactive year-end financial review checklist just for you. Okay. This isn't just a static list; it is a powerful tool designed to go through each step of your financial review. 

You can download this interactive checklist from our website at mariejocaesar.com. You will find the link in the description below. It will allow you to check off items as you complete them and input your own numbers. Okay. It is designed to make this process as smooth and insightful as possible.

So start by scheduling a specific time in your calendar to conduct your year-end review. Download the checklist and use it alongside the strategies discussed today to assess your 2024 performance and plan for 2025. So, if you found this episode helpful, please share it with friends or family who might benefit from a year-end money review. Your support in spreading financial wellness can make a real difference in someone's life.

Remember, I am here to support you on your financial journey. If you have questions about using the checklist or want to share your experiences, reach out to me on social media or leave me a comment on our website.

Your feedback helps shape future episodes and ensures we are providing the most relevant content for your needs. 

 Thank you so much for tuning in today's Merging Life and Money show. Your commitment to improving your financial wellness is truly inspiring.

Remember to download your free interactive year-end financial review checklist from our website. As I mentioned, this tool will help you put today's strategies into practice and set you up for a strong financial start to 2025. Next week, we will be discussing how to balance joy and finance, which will build perfectly on the foundation you will create with your year-end review.

I am your host, Marie-Jo Caesar. I will be back again next week. Until then, continue merging life and money and happy reviewing. Bye for now.