Year-end financial checklist: 8 essential steps to take before December 31 | Mint

As the year comes to an end, it’s a good time to take a moment and review your finances. The end of the year isn’t just for celebrations—it’s also a chance to organize your money, save on taxes, and get ready for a financially healthy 2025. Whether you’re someone who plans everything carefully or someone who’s catching up on your financial tasks, this easy checklist will help you finish the year on the right note.

Take stock of your investments and rebalance

Over the course of the year, your investments may have drifted from your original plan due to market movements. Rebalancing at year-end helps bring them back in line with your financial goals and risk appetite.

Optimise your tax planning

Tax planning can often feel like a rush job in March, but December is a perfect time to get ahead of the curve. Starting now means you’ll have more options and fewer compromises.

What to do:

• Maximize section 80C deductions: Consider popular options like PPF, Sukanya Samriddhi Yojana, and NSC. If you’ve already contributed to your EPF through your salary, calculate how much more you need to invest to reach the ₹1.5 lakh cap.
• Don’t forget section 80D: Health insurance premiums offer deductions of up to ₹25,000 for individuals and ₹50,000 for senior citizens. This is a great way to save taxes while safeguarding your family’s health.
• Contribute to NPS: If you’re building a retirement corpus, contributing to the National Pension System (NPS) can fetch you an additional ₹50,000 deduction under Section 80CCD(1B).
• Pay advance tax on time: If you earn income outside of your salary, such as from a side hustle, freelancing, or rental properties, ensure you meet the December 15 deadline for advance tax. This helps you avoid interest penalties and unnecessary stress later.

Tackle high-interest debt

Debt is a reality for many of us, but high-interest loans like credit card balances or personal loans can silently erode your financial stability. Clearing or managing these debts can save you significant money in the long run.

What to do:

• Focus on credit card debt: With interest rates often exceeding 36% annually, credit card balances should be your top priority. Use any extra income, like bonuses, to pay off as much as you can.
• Make partial prepayments on home loans: Many banks in India allow partial prepayments without penalties. Even a small prepayment can reduce the overall interest burden on your home loan significantly.

Use bonuses strategically

Year-end bonuses or festive windfalls can be tempting to splurge, but they also offer an excellent opportunity to shore up your finances.

What to do:

• Invest in long-term growth: Allocate a portion of your bonus to PPF, mutual funds, or other long-term instruments. This not only secures your future but also reduces taxable income.
• Boost your emergency fund: If you dipped into your emergency savings earlier this year, now’s the time to replenish it. Having 3–6 months’ worth of expenses in an easily accessible fund is essential for financial peace of mind.
• Top up your SIPs: Increasing your SIP (Systematic Investment Plan) contributions—even slightly—can make a big difference over time.

Reassess your insurance needs

Life changes, and so should your insurance. Year-end is a great time to ensure that your coverage keeps up with your responsibilities.

What to do:

• Review your health insurance: Rising medical costs make it essential to have adequate health coverage. Consider adding a super top-up plan if your current policy feels insufficient.
• Update your life insurance: If you’ve experienced major life events like marriage, childbirth, or buying a home, reassess your term insurance coverage. Make sure it’s enough to secure your family’s future.
• Check beneficiaries: While at it, confirm that the beneficiaries listed on your policies are up-to-date.

Explore New Investment Opportunities

The investment landscape is constantly evolving, and year-end is a good time to consider fresh avenues that align with your goals.

Plan for big goals in 2025

Whether it’s buying a house, funding your child’s education, or planning a dream vacation, clear financial planning is essential.

What to do:

• Break down goals: For example, if you need ₹5 lakh for a home down payment in two years, you’ll need to save ₹20,000 every month. Automate this to ensure consistency.
• Start early with tax-saving investments: Instead of cramming in March, begin your tax-saving investments in April itself. This ensures better cash flow management and allows for more thoughtful choices.

Strengthen your emergency fund

An emergency fund is your financial safety net, but it only works if it’s fully funded and easily accessible.

What to do:

• Replenish used funds: If you’ve dipped into your emergency fund this year, prioritize rebuilding it. Use year-end bonuses or cut discretionary expenses temporarily.
• Keep it liquid: Avoid locking up your emergency savings in long-term investments. Liquid mutual funds or high-interest savings accounts are great options.

Final thoughts

Year-end financial planning isn’t just about numbers—it’s about giving yourself the clarity and confidence to face the new year with purpose. By taking these steps, you’re not just wrapping up 2024; you’re setting the stage for a financially secure and prosperous 2025.

So, grab a cup of coffee, sit down with your financial documents, and tick off this checklist. Your future self will thank you for it!

Chakravarthy V., Cofounder & Executive Director, Prime Wealth Finserv Pvt Ltd