Year end is 'absolutely a great time' to review your finances, CFP says: Here's what to do

Early Q4 is highlighted as a crucial period for year-end financial and tax planning, leveraging actual financial data. Key tax strategies, requiring action before December 31, include navigating the temporary increase in the SALT deduction cap to $40,000 for 2025, which may necessitate prepaying taxes, and considering delaying certain charitable donations until January to capitalize on a new $2,000 tax break. This proactive planning is particularly important amidst anticipated consumer spending pullbacks for the holiday season due to inflation and tariff concerns, with 41% of consumers expecting higher gift costs.

Analysis

Early in the fourth quarter is an ideal time to tackle some financial planning tasks that set you up for success for the rest of the year — and into 2026. “It’s absolutely a great time to do that,” said Dan Moisand, a certified financial planner and director at Moisand Fitzgerald Tamayo in Orlando, Florida. The firm is ranked No. 69 on CNBC’s Financial Advisor 100 for 2025. One advantage: You have actual financial data available — such as income from work, interest and dividends, as well as money you’ve spent — rather than working with estimated figures, he said. That can aid with year-end tax planning. What’s more, now is also a good time to prepare your budget for the upcoming holiday season to make sure you start off the new year without financial stress, said Gloria Garcia Cisneros, a CFP and wealth manager at LourdMurray in Los Angeles. Last year, about 36% of surveyed Americans took on holiday debt, averaging $1,181, according to a report by LendingTree. The site polled 2,049 adults in December 2024. Here’s how to gear up your finances for the end of 2025 and prepare for the new year, according to experts. ‘The most crucial and impactful tax strategies’ While the deadline for individual tax returns falls in April, “the most crucial and impactful tax strategies” often need to happen before December 31, said Chelsea Ransom-Cooper, a CFP, co-founder and the chief planning officer of Zenith Wealth Partners in Philadelphia. This year, year-end tax planning is even more important, given that President Donald Trump’s “big beautiful bill” made several tax law changes, said Ransom-Cooper, a member of CNBC’s Financial Advisor Council. For instance, the law temporarily increased the cap on the deduction for state and local taxes, or SALT, to $40,000 for 2025, up from $10,000. That higher cap is a “completely different ball game for a lot of people,” Ransom-Cooper said. Maximizing it may require strategizing — say, by prepaying certain taxes. On the other hand, there’s a new tax break worth up to $2,000 for cash charitable donations for non-itemizers, said Moisand. However, the law doesn’t take effect until January — which means some taxpayers may benefit from delaying small year-end charitable gifts until the new year. “The biggest mistake is just thinking of each tax year in isolation without considering the levers that you could pull,” Moisand said. ‘The last thing you want’ for 2026 Use these last months of the year to think about where you are financially and what your goals are for the future, said Cisneros, a member of CNBC’s Financial Advisor Council. That can help keep your spending on track. This year, early forecasts show that worries about higher costs from inflation and tariffs may prompt consumers to pull back. About 41% of consumers are concerned that gifts will be more expensive this year and 30% said they expect to spend less this holiday than they did last year, according to a recent report by Bankrate. Think about different ways to get ahead and avoid overspending, like taking advantage of sales or finding other ways beyond gifts to express care and appreciation for others, Cisneros said. “The last thing you want is to start 2026 with a lot of stress financially,” she said. CNBC receives no compensation from placing financial advisory firms on our Financial Advisor 100 list. Additionally, a firm or an advisor’s appearance on our ranking does not constitute an individual endorsement by CNBC of any firm or advisor. The article highlights a cautious outlook for U.S. consumer spending in Q4 2025, presenting a potential headwind for the retail and consumer discretionary sectors. Key data from a Bankrate report indicates that 41% of consumers are concerned about higher gift costs due to inflation and tariffs, with 30% expecting to spend less this holiday season than in the previous year. This forward-looking sentiment is underscored by historical data from a LendingTree (TREE) report, which found that 36% of consumers accrued an average of $1,181 in debt during the 2024 holiday period, suggesting that consumer balance sheets may already be strained. While the piece also discusses tax law changes, such as the temporary increase of the SALT deduction cap to $40,000 for 2025, the dominant signal for investors is the evidence of weakening consumer demand. The advice for individuals to budget carefully and avoid debt reinforces the narrative of a financially constrained consumer, which could temper revenue expectations for companies reliant on holiday sales.

Key Decisions for Investors

• Investors should re-evaluate exposure to the consumer discretionary sector, particularly specialty retail, given that early forecasts indicate 30% of consumers plan to reduce holiday spending.
• Monitor consumer credit health and delinquency rates closely, as the finding that 36% of consumers took on significant holiday debt last year suggests a heightened risk of financial stress.
• Consider the relative performance of discount retailers versus premium brands, as a consumer environment marked by inflation concerns may favor companies that offer strong value propositions.