It might be the Christmas party season, but if your finances are feeling tighter than your waistband, perhaps it’s time to take stock.
December is the perfect month to carry out a financial review. Whether you are planning for retirement or managing investments, setting clear goals for the new year helps you stay on top of your budget and improve your long-term wellbeing.
Where do the years go? It might seem like five minutes since Santa last slipped down the chimney, but much has happened in the last 12 months.
As 2025 draws to a close, we are recommending you set aside a little time to understand where you sit financially. Life changes, rising living costs and market fluctuations can all have an impact on your retirement plan.
Assessing your financial health in December means you have three months to maximise your tax allowances before the fiscal year end. This is particularly pertinent after the changes announced in the autumn budget. It is also an opportunity to put an emergency fund in place to cope with unexpected expenses, and ensure your investments still align with your long-term goals and risk tolerance.
Review your income and spending
When we conduct a review for clients, we start by checking your budget.
It is essential to compare your current spending against the figures upon which your financial plan was built. This includes the essentials, such as housing costs, utilities, food and transport, as well as your savings goals.
If you can identify areas where you have overspent recently, we can check if adjustments can be made for the new tax year. Christmas puts a strain on anyone’s budget, but could you cut back on dining out, subscriptions or impulse purchases? By reducing unnecessary costs, you can free up some cash for pension contributions or investments.
Prioritise savings
If something was to happen and you were unable to work, could you pay your bills? We recommend you have enough put aside in an instant access account to cover three to six months’ essential expenses. If you’re not there yet, make this a priority for 2026.
For most households, this figure would probably range from £5,000 to £15,000, depending on your living costs. Having a good grasp on your monthly expenditure will help you work out what you need to save.
If it feels impossible to find the money to put aside every month, start small. Identify what you spend on discretionary or luxury items and redirect that amount until your emergency fund is in place.
Be more tax savvy
Before the tax year ends, it’s really important to consider the tax savings you could be making and any allowances you haven’t used in full.
In the autumn budget, the Chancellor announced a reduction in the cash ISA allowance for under 65s, which comes into effect in April. It is intended to encourage people to invest, rather than sit on cash in the bank that could be worth less in the long-term, due to inflation.
After a brief increase, interest on savings is falling again too, so it is worth assessing how much you hold in cash and whether it could be working harder in an investment ISA or other form of asset.
Have you considered making or increasing your pension contributions to ease the tax burden? This is especially important if you are a higher rate tax payer or you’re aiming to boost your retirement savings.
We also urge clients to review any unused allowances for gifting or inheritance tax planning. For example, did you know there is an annual gift allowance of £3,000 and small gift exemptions you can use?
Check your investments
When was the last time you checked how your investments were performing? Are they producing the returns you expected?
Investments need regular attention if you want to maximise their growth and performance potential. We recommend reviewing your portfolio with a financial planner, who can assess how much you are paying in fees and where your investments are placed. We will also discuss your risk profile and time horizon, to see if your goals or circumstances have changed.
Once you have all the information required to make an informed decision, you can consider rebalancing your portfolio if it could be working harder. Don’t worry if this sounds daunting, it is quite complicated, so always seek professional advice to avoid costly mistakes.
Protect your future
We’ve talked about saving for a rainy day, but what would happen if a major storm blows in?
Life cover, income protection and critical illness insurance all have important roles to play in any long-term financial plan. If you don’t have them in place, it’s time to rethink that decision.
Even if you have all three bases covered, they need reviewing to ensure they are still going to meet your needs. You may find they need updating to reflect changes in your life like a new mortgage, more dependents, etc. Ideally, you want the policies to provide enough money to pay all your debts and provide for your family for at least five years.
Final thoughts
An end of year financial review isn’t just about whether you can afford those extra Christmas presents. It is peace of mind.
By taking the time now to think about your retirement goals, pension contributions and tax strategies, you can ensure your lifestyle and estate planning isn’t derailed by an unexpected event.
Enlisting the help of a professional financial planner will ensure any gaps in your plan are identified and you use all available tax allowances. It is our job to create you a roadmap for 2026 and beyond.
By learning how to assess your financial health, you will start the new year with confidence and clarity.
To arrange a year-end review of your finances, don’t hesitate to contact us on (01246) 298181 or email: enquiries@belmayne-ifa.com
