5 Year-End Financial Moves Realtors and Self-Employed Professionals Must Make Now

As the year winds down, it’s time to take inventory of your finances and set yourself up for success in the coming year. For real estate professionals and self-employed individuals, your financial circumstances often come with unique challenges and opportunities. From fluctuating incomes to navigating tax-saving strategies, there’s no better time than now to get organized and optimize your financial plan.

Here are five essential steps to take before December 31st to finish strong and prepare for a prosperous new year.

1. Review and Optimize Your Tax Strategy

Taxes are a major consideration for realtors and self-employed professionals, especially given the quarterly tax payment schedules and deductions available to you. Now is the perfect time to:

Maximize deductions: Review expenses like mileage, home office costs, and continuing education. These can significantly reduce your taxable income.

Consider a retirement plan contribution: Contributing to a Solo 401(k) or SEP IRA could lower your taxable income while boosting your retirement savings.

Plan ahead for Q1 taxes: Ensure your cash flow plan accounts for estimated tax payments due in January. Working with a Certified Financial Planner (CFP) can help you make smart moves to minimize liabilities and avoid surprises​​.

2. Organize Your Cash Flow for a Variable Income

The unpredictability of commission-based income makes cash flow management a critical priority. Take steps to ensure you’re financially steady during lean months:

Establish a high-yield savings account as an emergency fund for covering expenses during slower periods.

Use a tiered savings plan to allocate funds into short-term (operational), medium-term (investment), and long-term (retirement) goals.

Evaluate whether your budget aligns with the highs and lows of the real estate market. A financial advisor with experience in realtor finances can help create a customized cash flow plan​.

3. Review Insurance and Risk Management Plans

Realtors often lack the employer-provided benefits that many traditional employees enjoy. This makes year-end the ideal time to:

Assess whether you have sufficient health, disability, and life insurance coverage.

Look into liability insurance or errors and omissions insurance tailored to real estate professionals.

If you’ve had a significant life change—like a marriage, a new child, or purchasing property—ensure your policies are up-to-date​.

Proactively reviewing insurance policies ensures your financial security and peace of mind heading into the new year.

4. Refine Your Investment and Retirement Strategy

As a self-employed individual, your retirement savings plan likely requires hands-on management. Before the year ends, focus on:

Maximizing tax-advantaged accounts: Fully fund your Roth IRA or backdoor Roth IRA if eligible.

Evaluating your investment portfolio: Ensure your asset allocation reflects your goals and risk tolerance.

Planning for big-ticket investments: Whether you’re eyeing a rental property or a brokerage account, align these decisions with your long-term financial goals​.

By working with a CFP experienced in financial planning for realtors, you can build a retirement strategy tailored to your unique circumstances.

5. Conduct a Year-End Financial Check-Up

Finally, it’s crucial to get a bird’s-eye view of your overall financial health. A year-end review can help you identify gaps and opportunities:

Revisit your goals: Have your financial objectives changed? Update your roadmap to reflect your priorities.

Track your net worth: Calculate your assets versus liabilities to gauge progress and guide decisions.

Estate planning: If you’ve experienced a major life event this year, update your beneficiaries and review your estate plan​​.

This step ensures your financial decisions align with both your immediate needs and long-term aspirations.

Why Realtors and Self-Employed Pros Need a Certified Financial Planner

Navigating the complexities of self-employment finances isn’t a solo mission. A Certified Financial Planner specializing in real estate professionals can help you streamline your efforts, save on taxes, and grow your wealth. By collaborating with a financial advisor, you can focus on your business while gaining peace of mind about your financial future.

Don’t let another year pass by without taking control of your finances. Implement these strategies now to close the year with confidence and prepare for a successful 2024.