Year-End Money Decisions Made in a Panic Are Rarely Good Ones
By Michael Sicuranza, CFP®,CPA, AEP®
Every December we watch the same scene. Capable, intelligent people, people who run businesses and departments and households, making some of the year’s largest financial decisions in its smallest window, with holiday obligations on one side and a hard deadline on the other. The decisions get made, because deadlines are good at that. What they are not good at is quality.
What a deadline does to thinking
Behavioral researchers Sendhil Mullainathan and Eldar Shafir spent years studying what scarcity, of money and of time, does to decision-making. Their finding, documented in the book Scarcity, is that operating under a shortage narrows attention onto the immediate demand, a state they call tunneling, and the thinking that falls outside the tunnel is often the thinking that mattered. Under time pressure, people do not simply decide faster. They decide about less.
December is tunneling season for money. The charitable gift gets made to whatever cause comes to mind first rather than the one a family actually meant to support. The tax move gets taken or skipped on instinct. The rebalance happens in whatever direction the last headline pointed. Each decision is defensible in isolation. Together they are what an unplanned year looks like when it lands all at once.
The same decisions, three months earlier
Now run the identical list in September. The charitable giving conversation happens over a kitchen table instead of between obligations, with time to involve the kids, something we wrote about in August. The tax picture gets reviewed while there are months of paychecks left for a withholding fix to spread across. The rebalance happens against a plan instead of a mood. Nothing about the decisions changed. The only thing that changed is the size of the room they were made in.
This is the entire argument for deciding in September, and it is boringly practical. A decision made this month has a quarter to be corrected if it needs correcting. A decision made the week before New Year’s is final whether it deserves to be or not.
What actually belongs on the September list
Not everything. Year-end has a short list of decisions that genuinely reward being made early: the tax moves with calendar deadlines, the charitable plan, the rebalance and any repositioning behind it, the retirement contributions still catching up, and the conversation about anything the year changed, a job, a sale, a family shift, that the plan has not caught up with yet.
An hour in September covers that list calmly. The same list in December covers you.
Arrive at Q4 with a plan
This is what a Q3 check-in is for, and September is its natural deadline, not an invented one. Personal tax planning works best while the tax year still has room to move, and financial planning for retirement works best when decisions get quarters instead of weeks. Your advisor builds the mid-year picture before you arrive; the hour goes to the short list above; you leave with decisions on a calendar and December already handled.
We have watched Delaware families do year-end both ways since 1974. The ones who feel settled in December decided in September. Book your Q3 check-in before the month closes and let this be the year the holidays are only about the holidays.