Struggling with finances? Here's how year-end review can reset your money life

As people move through the year earning, spending, saving, and investing, the end of the year calls one to reflect on the state of their finances.

Finance coach and advisor Margaret Njeri offers ways you can look back at those choices.

She describes financial closure as taking stock of your finances throughout the year and using those insights to prepare for the next. It is about understanding whether your financial behaviour matched your goals, values, and priorities.

The real insights from financial reviews, she says, come from examining the choices and habits behind the numbers.  

One of the main reasons to review your finances before the new year begins is that unexamined habits repeat themselves. Without this, people can easily carry on with the same patterns into the next year, and this can lead to feeling stuck financially. 

“A year-end review helps you celebrate progress, identify leaks, and start the new year with clarity. It is your chance to correct things before 2026 begins,” she says.

A detailed review starts with income and asks whether your earnings were stable or seasonal and whether you relied on one stream or several.

It then moves into spending and requires looking at big purchases and at the small habits throughout the year. This, Margaret says, asks where your money went and whether those expenses reflect what matters to you. 

The next step involves looking into your savings and investments and seeing if they grew or stagnated. You then look at debt and observe if it increased or reduced. Then you revisit your insurance to check if it is still relevant to your needs.

The review also entails assessing if your financial goals have been achieved, delayed, or ignored, along with the reasons behind the outcome.  

Margaret says that you can tell if you had a financially healthy year if you met most of your goals, spent intentionally, built savings, reduced debt, and still had peace of mind around money.

What challenges people during reviews is the tendency to focus only on numbers and ignore habits. Comparisons with others distort one’s idea of progress, and many people avoid confronting uncomfortable truths about overspending or impulse buying.

Others make hurried decisions in December, leaping into investments or large purchases, and another oversight is failing to update one’s goals even though life may have changed through new changes in personal priorities.

When year-end income such as bonuses or business profits comes in, she suggests equally enjoying the money and being responsible.

She encourages people to reward themselves while sticking to financial goals, growing their emergency reserves, and making space for giving.

“It is about treating this income as an opportunity to build up their finances while offering themselves the joy of their achievements,” she says.  

Margaret advises turning a financial review into an actionable plan for the next year by converting the insights into specific decisions. For example, stating the particular amount of money you want to go into your investment account monthly builds momentum.

“Automating transfers and setting accountability check-ins help these decisions become habits,” she says.

She also advises scheduling a meeting with a financial advisor early in the year to refine strategies and plan more effectively for taxes and future opportunities.

An important part of financial closure, she says, is going through the emergency fund.

She defines it as the first safety net and recommends having enough to cover three to six months of expenses. Strengthening this fund adds stability and prevents unnecessary debt when unexpected events arise.

Furthermore, you should also reflect on any overspending and impulse buying patterns and their reasons to be able to nip them in the bud. “Even as you spot these habits, detach guilt from past financial mistakes and view them as lessons about what needs to change in the new year,” she says.

Margaret believes that even people who are financially stable benefit from year-end reflection.

It helps reveal inefficiencies, ensures better tax planning, and improves portfolio performance.

High earners must assess if their money is productive or circulating without creating long-term growth.

They can use the review to redefine success for themselves by ensuring their financial goals match with their evolving lifestyle.