138: Your Year-End Money Checklist — Don't Ignore These

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0:41Learn more at finra.org slash trade smart. Hey everyone, and welcome back to the Rich Habits Podcast, a top 10 business podcast on Spotify brought to you by public.com. By the end of this episode, you'll know exactly what moves you need to make before December 31st to keep more money in your pocket, pay less in taxes, and set yourself up right for 2026. My name is Austin Hankwitz. I'm joined by my co-host Robert Croak. Robert is a seasoned entrepreneur with lifetime revenues of over 300 million, and I'm a multi-millionaire in my late 20s with a background in finance and economics. As the show name might suggest every episode, we talk about rich habits as they relate to business, finance, and mindset.

1:25So Robert, walk us through what we're going to be talking about in today's episode. In this episode of the Rich Habits Podcast, we're talking about something that could literally save you thousands of dollars if you set it up correctly in the next few weeks. Think of it as your year-end money checklist. Think of December 31st as your financial finish line. And if you cross it without making these three moves, you could be leaving so much money on the table. And we're not talking about vague advice like save more, budget better. We always talk about those things, but we're talking about more specific actionable moves that money savvy people make before the calendar year flips to 2026.

2:06Maxing out retirement accounts if you want to save on taxes, using up FSA funds before they disappear forever, making strategic charitable donations and doing a full financial review so you're not scrambling in January. That's right, Robert. Most people spend weeks planning their New Year's Eve and what they want to do to ring in the new year, but they won't spend a few hours mapping out some financial moves that could literally put thousands of dollars back into their pocket or save them from a massive tax bill come April. So some of the opportunities that we're talking about do expire on December 31st.

2:41So once that clock strikes midnight, those savings are gone forever. So you need to lock in, get some of these things done. By the end of this episode, we're going to tell you exactly what you need to be doing before midnight, December 31st. You can maximize wealth and minimize taxes and be a happy, happy person. So Robert, let's dig into the first one, retirement accounts. Number one is all about retirement contributions. And this one is huge because it's one of the few legal ways to reduce your taxable income yearly. If you haven't maxed out your pre-tax 401k or IRA, you've got until December 31st to make it happen.

3:17So you got to mark that down and stay on top of this. So let's break down some of the numbers. In 2025, you can contribute up to$23 ,500 to your pre-tax 401k if you're under 50 and$31 ,000 if you're 50 or older. And for IRAs, the annual contribution limit is$7 ,000 and$8 ,000 again, if you're over 50 years old. So now here's the key. Every dollar you put into a traditional 401k or traditional IRA reduces your taxable income dollar for dollar. That's the key here. So if you're in the 24 % tax bracket and you contribute an extra$5 ,000 before December 31st, you just saved yourself $1 ,200 in taxes.

4:03So that's$1 ,200. You're not sending the IRS all because you're integrating rich habits before the end of the year. And here's what most people miss, right? You don't have to do this in a lump sum, right? So if you're behind on these contributions, talk to your HR department or your payroll provider and see if they can increase your contribution percentage for the last few paychecks of the year. Even if you're only getting an extra$1 ,000,$2 ,000, or$3 ,000 into this account, that's real tax savings come tax time in April. Now, here's an important note. This deadline of December 31st only really applies to these pre-tax 401ks and employer-sponsored retirement accounts.

4:44For individual retirement accounts, those traditional IRAs in this instance, you actually have until tax day of April 2026 to make some contributions for that 2025 tax year. But Robert, here's my perspective. I wouldn't wait because if you got the cash now, you should do it now. As we think about January, new year, new me, you're into some new routines. You might forget some unexpected expenses. You probably have a holiday spending hangover, right? So you're trying to recover from what happened between December 15th and January 1st. I don't think you're going to do a good job of, oh, I'll just make sure it gets done by tax time.

5:20Miss me with that. Let's instead get our money invested in the year of 2025, contributed, compounding, and working for us before. So we're not going to do one of these last minute Kobe Brian's from downtown to try and get it in before our tax accountant is drilling us for more info. Yeah, we covered this last night in the Rich Habits Live. And it really is, I feel like most people check out for the year and start that holiday party season, like November 15th. And then they run up the credit cards, they go do all these parties, they go travel around for the holidays, see family and friends do all of that.

5:56So the holiday hangover is real. But here's the plan. Log into your 401k account. Look at how much you've contributed year to date. If you're not maxed out, calculate how much more you can contribute before the end of the year, then adjust your paycheck contributions immediately. And please don't wait. That's a great breakdown, Robert. I love that. Not just the show we're sharing some ideas, but we're giving them the step by step, right? That's exactly step by step what you need to do. So that was the first move to consider to try and save some taxes. Now let's walk into the second one here, which is your flexible savings account and your health savings account and using those strategically between now and the end of the year.

6:36These are your use it or lose it accounts, specifically the FSA or that flexible spending account. If you have one of these with your employer, you need to pay attention because this money literally disappears if you do not spend it by December 31st. So flexible spending accounts are pre-tax accounts that you fund throughout the year to pay for medical expenses. Seems pretty straightforward. The problem is most employers have a use it or lose it rule. So if you don't spend the full balance by that deadline, which in most cases are December 31st, that money goes back to your employer and is gone forever.

7:13Fun fact, not even that fun, just a fact, Americans forfeit over$400 million a year in these flexible spending account funds every year because they forget to spend the money. Literally insane, Robert. This is your money. It's taken out of your paycheck. You're just handing it straight back to your employer. So here's what you need to do right now. I need you to log in to that flexible spending account. Check the balance. If you've got 100, 500, maybe$1 ,000 sitting in the account, you need to have a plan to spend it before the end of the year. Now, the good news is these FSA funds can be spent on more than just doctor visits, right?

7:50You can use them for prescription medicines, over-the-counter pain relievers, first aid supplies, sunscreen, contact lenses, glasses like what I'm wearing on my face, dental work. Maybe even some mental health services can get covered with this flexible spending account. So if you have a balance, you need to spend it, which means go stock up on the stuff you're going to buy anyway. And if you have a doctor's appointment that you know is going to come up, you need some dental work, need to get your eyes checked, Sometimes you can prepay on those appointments in advance so you're able to use this money before the end of the year.

8:21Now let's talk about health savings account. These are different. HSAs don't have a use it or lose it rule. So your money rolls over year after year and you can invest it just like a retirement account. So if you have an HSA, you don't need to panic. But if you have an FSA, you definitely have work to do and you need to make sure you get to those deadlines and spend that money. So here's a pro tip. Some employers offer a grace period into January or allow you to carry over a small amount, usually around$500. But be sure to check the specifics for your plan's rules because you don't want to count on it and lose that money.

9:00The safest move is to spend it before December 31st. That's a great pro tip, Robert. Now, your action plan here, check that FSA balance today. If you got that money, make a list, eligible expenses, go spend it, go start buying sunscreen. You can always use more sunscreen. You're always going to need it. Don't let that money go to waste. Robert, speaking of not wasting money, I think it's really important that everyone understands this reality, that if you are not yet investing toward building a nest egg to have in retirement, you will be working for the rest of your life. The only way you will ever be able to stop trading time for money is to have portfolio income that is growing for you over time.

9:37The easiest way anyone can begin investing towards their future is on public.com. You know we love public, and they make it incredibly simple to build a multi-asset portfolio, including ETFs, stocks, bonds, crypto options, and more. They also offer access to industry-leading yields of up to 3.7 % APY for your emergency funds. And for a limited time, you can earn a 1 % match on all IRA deposits, IRA transfers, and 401k rollovers. That's$1 ,000 of free money for every$100 ,000 that you roll over into their platform, which means if you're taking our advice here, you want to contribute a little bit here, save some taxes, go use public to do it.

10:16Go get the free 1 % match. We always talk about public, and I love it for you, Austin, because your new account that you put together, that new portfolio of small caps has been crushing it. And I just really love to see all of what public has to offer. and you can fund your account in five minutes or less, head to public.com forward slash rich habits and claim your 1 % match today. Paid for by public investing and full disclosure in the podcast description. Yeah, I'll put a screenshot on screen here. The small cap portfolio that Robert's alluding to, we started building a little something in the Rich Habits Network for fun.

10:53If you are part of the Rich Habits Network, you know what I'm talking about. If you don't know what the Rich Habits Network is, go check it out in the link in the show notes below. It's up 18.5 % in the month of September, which is pretty exciting. So we went from$28 ,000,$29 ,000 to now just about$36 ,000. All right, Robert, let's now talk about the last financial money move people can make to save on taxes and put more in their pockets at the end of this year. Yes, number three is all about charitable giving. And before you tune out thinking this doesn't apply to you, stick with me here. because even if you're not giving away huge sums of money, there are smart strategies here that can save you on taxes and help causes you care about most.

11:30So let's start with the basics. If you itemize your deductions, charitable donations are tax deductible. That means if you donate$1 ,000 to a qualified charity and you're in a 24 % tax bracket, you're saving$240 on your taxes while doing a really good thing. But here's the key. The donation has to be made by December 31st to count for the 2025 tax year. Most people think of charitable giving as writing a check to their favorite nonprofit, and that works, but there are smarter ways to do this, especially if you're giving larger amounts. One strategy is donating appreciated stock instead of cash.

12:10Here's how that works. Let's say you bought stock in Palantir a few years ago for a total of$1 ,000, and today it's worth$5 ,000. If you sell that stock and donate the cash, you're going to pay capital gains on the$4 ,000 of gain. But if you donate the stock directly to the charity, you get to deduct the full$5 ,000 and never pay capital gains tax. So the charity sells it tax-free. It's a win-win for everyone. And this is one of the most underutilized tax strategies out there. Most people have never heard of it. So make sure you're taking notes and taking actions here, even if you're only donating small amounts.

12:50So if you've got stocks or ETFs sitting in a taxable brokerage account with big gains like most of you do that follow the show, donate those instead of your cash. You get the full deduction, you avoid the capital gains tax, and the charity gets the same amount of money. Yeah, Robert, we had Steve Latham on the podcast. I think it was like a year or two ago, but he created the company DonateStock.com. So go check out DonateStock.com. We're not affiliated with them. It's just a great tool if you want to donate your stock to a charity to make it really seamless on how that happens there. So great strategy.

13:23Appreciate you calling that one out, Robert. Another strategy is actually bunching your donations. So let's say that you donate$5 ,000 a year to various charities, but you're not itemizing because your total deductions don't exceed the standard deduction. So instead of donating$5 ,000 this year and$5 ,000 next year, you could bunch the two years of donations into one. $10 ,000 total, let's say, in the year of 2025. You can itemize this year, take the standard deduction next year, and come out ahead on taxes. And if you're really strategic, you can use something called a donor advised fund. This is like a charitable savings account.

14:01You make a big donation to the fund this year, for example. You get a big tax deduction now, and then you can recommend grants to specific charities over time. Great way to bunch your donations together and still spread out your giving over a long period of time. So you get to enjoy the tax write-off in one year, but you don't have to deploy all of that capital to the places you want to donate to in that same year. So it kind of spreads things out, a little less pressure on you, but you still get the tax benefits. Yeah, I love these strategies and episodes like this because it really lays out a blueprint for people to help them understand better all of the things they can be doing with their money.

14:38and we always say it's not what you make, it's what you keep and that's what this episode is all about, getting the benefits, doing good things with your money with these charitable donations but also really keeping more for you in retirement and here's something that applies to people that are 70 and a half or older and that is called a Qualified Charitable Distribution or a QCD. So if you have a traditional IRA and you're required to take a distribution, you can donate up to$105 ,000 directly from your IRA to charity. That money never shows up as income, so you're not paying taxes on it. And this is huge for retirees who don't need the money from the required minimum distributions.

15:18So instead of taking the distribution, paying taxes, and then donating the cash, you skip the tax step entirely and send it straight to the charity. So here's the plan. If you're going to donate this year, do it before December 31st. And if you're giving larger amounts, look into donating appreciated stock or setting up a donor advised fund. And if you're over 70 and a half, talk to your financial advisor and definitely check out the QCDs. Robert, building wealth isn't just about making more money. It's about being smart with the money you already have. And that means taking advantage of the tax breaks, employer match, and every opportunity that the system gives us, right?

15:58The government and your employer are basically offering you free money through retirement matches, tax deductions, pre-tax retirement accounts, All the stuff that we kind of know and are familiar with, but we're not exactly sure as to how strategically and tactically apply this information. Well, that's what this episode just did. And if you use them and you do it right before December 31st, you could potentially save thousands of dollars. Remember, wealthy people aren't wealthy because they make all the right investment picks or because they got lucky. They're wealthy because they're intentional with their money.

16:28They make smart choices consistently and they don't leave money on the table. That is one of the biggest messages Austin and I put out in these podcasts every single week is to give you guys the blueprint, all the options so you can take advantage of all of this just like we do and just like all the other wealthy people that we work with. So go prove to yourself that you're serious about building wealth. Take action on these three moves before December 31st and your future self and your family will definitely thank you. All right, Robert. I love these breakdowns. These episodes I think are really helpful.

17:01and you know it's not it's not that we're sharing some crazy tax loopholes that Elon Musk uses right I'm not we're not doing that but what we are doing is we're just making sure people have full information right if they want to have some some larger 401k contributions because they're in a big tax bracket and they're really trying to pull that down here's what you can do if you have an FSA with your employer and you didn't really know it was use it or lose it well now hopefully you do maybe you want to you know you're sitting on sixty thousand dollars of capital gains on a stock your grandfather gave you, well, if you donate it, you could probably use that as a wonderful way to support a cause you love as well as offset some taxable income.

17:37There's a lot of different bits and pieces to not just building wealth, but preserving it and using it for purposeful things in our lives. And I hope this episode helps a lot of people come to those conclusions. Yeah, definitely. I love that recap because, you know, I do all these one-on-one calls to help people and give them guidance and education. and I'm always shocked by how many of financial advisors and people out there that are wealth advisors don't teach people anything. They just say, here's what we're gonna do, but they don't give them all of the advantages that we share and we try to educate people on with this podcast.

18:10So episodes like this can literally change the trajectory of someone's life and financial life and family's life because they're taking advantage of what's already out there and easy for them to implement into their portfolios. All right, Robert. Now, before we jump into the Q &A section of this episode, investors need to listen up. If you've been itching for some in-person events in 2025, you are in luck. Our awesome partners over at Blossom Social are hosting their third annual investor social tour, where hundreds of DIY investors across North America meet up in person for an evening of food, drinks, networking, education, and fun.

18:49And they're hitting seven cities still this year, including LA, Vancouver, Calgary, Chicago, Montreal, and Toronto, hosted at the Rogers Center for the baseball fans. Yes, where the Blue Jays play. And New York hosted at the NASDAQ Center in Times Square. So you guys know how much we love Blossom as an online social network, and they're all about connecting investors online. Well, now's your chance to see what the community is all about in real life at these events. So make sure to check it out. And Robert, I'm on the website right now. I'm seeing Chicago and Los Angeles are the last two stops still available.

19:26New York is still available. It's actually happening tomorrow, October 3rd, but it's sold out. So nothing to do there. But you can go visit the SIBO in Chicago, which is where that's taking place. And then the LA Pier Hotel or La Pier Hotel, whatever that is in Los Angeles on October 15th is still taking place. So you've not run out of time. If you still want to go get some tickets, they've hooked us up with a 15 % coupon code. Richhabits15, all uppercase, one word, one code there. Go use that at checkout. Link in the show notes below or visit blossomsocial.com forward slash 2025investortour. Wish we could make some, Robert, but our schedules are just a little too busy for running around the country like this.

20:09All right, Robert, let's jump into our first question coming from Jared C. on Instagram. Jared says, Hi Robert and Austin, I'm reaching out for help. For three months, I've been researching different business types to purchase as a side hustle with the potential to expand and grow. Among the most successful are vending machines, ATMs, car washes, and laundry businesses. I'm considering buying a vending machine business listed on BizBuySell. The business has six machines at four different locations and they currently do not profit share with those locations. It is priced at$21 ,000. I've researched the cost of buying new machines and they range between$3 ,000 to$8 ,000.

20:45That said, the asking price of$21 ,000 seems high for older dated machines to me. So here's my question. Can you please give me some of your advice on how to assess the business and make sure that this is a fair asking price? I have deliberately not contacted the seller, so I might hear from you two first. Love your show. Grateful for your help. Keep killing it. Jared. Yes, Jared, here's what you got to do, my friend. In my experience, vending machine businesses are valued at one year's total top line revenue. So the 21 ,000 has nothing to do with the age of the machines, how new or how old they are, or anything like that, or how many locations, how many machines.

21:24It only has to do, in my opinion, I don't know anything about this business beyond what you just told me in this Instagram DM. All it has to do is with the fact that this company likely generates about$21 ,000 a year of revenue, right that's revenue that's not profit think about margins of anywhere between 25 to 50 percent depending on the types of candies and sodas and your gas to you know run around and do this and pay people things like that how do i know if it's a good business or not i would ask for some financials i would also if i were you i would spend a saturday visiting one or two of those machines and just hanging out for two or three hours at each one doing some diligence to see if people are actually going up to them how quickly they sell out what types of candies they're selling, how fast or how much you can buy at a Sam's Club or a Costco or an Amazon, what do those margins begin to shape up as.

22:12And sometimes if the seller is a nice person, they're going to tell you everything they do. They'll give you the whole blueprint. They'll say, yeah, this machine's been kind of tricky. But, you know, for example, I had a friend who had a lot of vending machines here in Nashville and they had a vending machine in the boys dormitory at Vanderbilt University and he crushed it with honey buns. He's like, these guys eat honey buns, like it's nothing. I mean, they're going through so many honey buns. I got to restock every two days. And so he's like, so that's the thing we're doing. Every vending machine owner has like a plan.

22:41They know what sells right. So talk with them, let them know that you're interested. Let them know you're always negotiate the price. Ask them why 21 ,000? Is it last year's revenue? Like what are the margins? Like really walk through the numbers here, but understand like, okay, if I'm spending$21 ,000 this year to buy this vending machine route, how much of that is going to turn into profit in my pocket, likely anywhere between$6 ,000 to$7 ,000, maybe closer to$5 ,000 depending on the margins. And now you've got to think, okay, how long is that going to be for me to completely get a return on my investment?

23:13And what's the opportunity cost of not putting that$21 ,000 into something like the stock market that's up 15 % this year, or gold that's up 45 % this year, or whatever else the opportunity cost you want to benchmark that against? Austin, I think that was an incredible breakdown, and I just want to add a couple things. Don't worry so much about the age of the machines. worry about the actual numbers. You're spot on. You want to get three years of financials and here's why. Not so much because of the profit. You want to find out if the locations and placement of these machines are solid and if they're pretty straightforward as far as consistent with their sales.

23:49Because what you don't want to find is when he placed the machines five years ago, sales have dropped off every single year in the locations or some of the locations because the value for you is finding a vending route or anyone that's looking at this type of business that has really good route stops. So the locations of all the machines are constantly selling well. Now, to talk about profits, let's say that this route does$21 ,000 a year. Austin is spot on. You need to understand the opportunity cost because all the fake gurus on the internet are gonna tell you, oh, my business does$500 ,000 a year.

24:27What you bring in means nothing. It's what you take home. Net to you is the most important part. And if you bring home$7 ,000 a year on this$21 ,000 investment, which is probably spot on, you have to understand and deduce, is it worth it for my time to manage, pick up, gas, wear and tear, time and everything to be able to keep an eye on these machines and do all the work? you have to decide because only you know if that is worth it for your time or if you think you can update the machines, have better selection and keep growing it, that's a different matter. But that's what I would look at is three years of financial.