8 Things You Must Do Before 2026 (Financially)

Hey there, real quick before we jump into the episode, listen, if your earnings treadmill hasn't set you free yet, running faster won't either. Listen, hustle without principles just going to burn you out. So here's what I want for you. I want you to join me for my money machine experience Live it is three free trainings. Deep dive into how to escape the treadmill and build a money machine that actually works for you. All right, grab your spot here by going to moneymachinelive.com and I'll see you in the free training. Here's a number nobody's talking about. 70% of people enter a new year in the exact same financial position as the year before. Not because they didn't work hard, not because they didn't care, but because the wrong decisions get made in December and the right decisions never do. So today I'm going to walk you through eight financial moves you need to make before before 2026. If you want less stress, more clarity, and stronger momentum going into next year and at the same time optimizing your wealth and your cash flow this year with what we have left. These aren't theories. These are real levers that affect cash flow, taxes, safety, and long term wealth. And I have spent over 30 years as a CPA and a money mentor using these exact moves for my clients. This is building your money machine, where we help you master your money, eliminate financial stress so you can live a life of choice. Because earning more doesn't make you free, a money machine does. Let's do this. All right. Let's face it. The last thing you want to really do during this time of year is talk about money, finances, taxes, expenses, and all that stuff. But here's the deal. If we don't, we set ourselves up for a difficult time in the coming year. This is a wonderful time for you to reflect, to re examine, to reconsider some of the things that maybe you did this year in your finances and your money and how you might want to change it next year. And so I'm going to walk you through these eight steps. Now, there may be more, but these are the eight core elements that I walk through every single year, not just for myself, but with my clients too. So the first thing, and this is probably one of the most difficult ones, it ain't sexy, is to do this, is to redesign your spending plan. Okay? Now here's what I mean by this. This is going to require you to do some things. That means that you're going to need to audit and think about where your money's spending. And the first things I would look at is looking at the big three expenses that you have, which is housing, transportation and food. Okay, now I get it. Food has gotten outrageously expensive. But at the same time we have to look at what we're doing. And when you think about housing, you got to look at rents or mortgage, but more importantly maintenance, insurance, all those things to see is there flexibility, are there things that I can do to manage it better, to get it, get control of it better? Because the spending is the foundation of some of the things that you're doing. Because we have the money coming in, we have to use the money to build the money machine and to give you the wealth that, that you want. I get it. It's not fun, but it's the lever that makes everything else possible if we're not careful. And so, so these first three categories to look at is housing, transportation, food can make up 60 to 70% of where our money disappears. I mean it is, they disappear faster than like socks in a dryer. But this is the thing that we need to think about. I want you to look at it, I want you to see are there places I can cut, are there places that I can change some things, are there things that we can do differently with these big three expenses? Now we're not going to leave everything else off the table here. We're still going to look at the other expenses, but this is where we start to look at the other expenses through a set of eyes. Where the second thing here is to renegotiate everything. Now I think everything's negotiable. So things like your Internet, your phone, your insurance, your subscriptions, are we using them, are we getting value out of them? This is the time to sit back and look at what we did because all of a sudden lifestyle creep over the year catches us. But this is a time to set ourselves up for success in 2026, in the fall, in the coming year. And so it's really important to look at it. And here's the other thing is that renegotiating at this time of year, people are in a, in good spirits usually. And there's year end deals, there's Black Friday deals and everything going on anywhere. This is the time to escalate the conversations with some of your, your providers, you know, and if they don't have a deal that they want to give you, then you ask for a retention department and escalated and have those conversations because let's face it, I know that you've probably seen the same thing. They give these great deals to new customers, but they don't take care of their loyal, their existing customers. And I think that's, that's crappy. Take care of the people that are taking care and taking care of you. I have told, told providers I will leave, and I have left, and if they don't want to work with me. So look at your phone, look at your Internet, your insurances, subscriptions, all of those things. And then look at the other expenses. Where are we just leaking money over time and see if we can plug those leaks? This is the thing that we need to do in this first step. Now, there's a third element that starts to drive all of this. And this is something that most people don't do, but I think that it's powerful when you do. It's something that I do all the time. And that is now when you look at spending in the coming year, realign your spending with your values. Not TikTok trends, not your neighbor's new car, not peer pressure, not anything else. But to get really clear on what matters to you, what, what do you value? What really, truly matters, and make sure that you're spending to make those values, to support those values, to actualize those values. So if you value peace, you spend on peace. If you value family time, you spend on that. If you value convenience, cool. Own that. Okay? But here's the thing. When your spending is aligned with your values, you find more joy and fulfillment in what you're doing. The challenge is that we get momentary pleasures because we do impulsive spending, and that's what creeps on us. So you're not spending based on obligation, pressure, or autopilot anymore. This is going to give you clarity, real clarity about what, what you're spending is, where it's going, why it's going. And this is also going to be the foundation for the next step. Step number two, and that is this. Confirm your cash safety net. See, your cash safety net is your emergency fund and your peace of mind fund. Now, your emergency fund is three to six months emergency cash set aside for emergencies. This is your baseline protection. This is the oh, life just punched me in the face kind of fun. That's what it's there for. Now, what I, why I did this in this order, where I said, let's look at our spending first, as painful as it could be, is that without understanding what our ongoing spending is, we can't see if we have enough in our emergency fund or peace of mind fund. But now if we do step one, we know that that's the number we're going to use to build in step two in understanding what our three to six month emergency fund is to make it happen. This is where you get that foundation. Now, emergency fund is three to six months. I've done videos on this and episodes on this before. I like going to a peace of mind fund. Nine to 18 months, depending on your age, stage or circumstances. This is where when you have nine to 18 months, your nervous system finally actually unclenches and relaxes. It allows you to sleep at night because you're not having to make financial decisions out of panic. Three months is, is fine. Six months is decent, but nine to 18 months is, is really helpful if, God forbid, something happens like my cancer. Now, this money needs to be set aside in a separate account. Now you may have a lot of this already done. Just reevaluate. Is it enough? Is it too much? And you want to put it all into a high yield savings account or somewhere that is earning enough interest and it's liquid and insured to at least get yourself beyond inflation. Okay? This is sacred cash that isn't meant to build wealth, but is meant to protect your wealth. It is untouchable unless it's an actual emergency. That's not a, oh, Target had a sale kind of emergency. That is a actual emergency. This is what's going to give you stability and everything. And now you've got clarity. Okay, that leads me to number three. And number three is I want you to run your net worth snapshot. This is your net worth scorecard. Now, we're going to run it at two levels. Your total net worth and what I call your investable net worth. This is going to rip off the band aid, if you will. The total net worth is this everything you own minus everything you owe. Okay? Everything you own is everything. I mean, your cars, your home, your clothes, all the stuff, okay, those are assets. Now are they true assets that we can sell? Maybe. But at the same time, I want to know what that total number is. But then I want to know what I call the investable network. This is the more important one. And this is the stuff that actually builds your future lifestyle, that funds your future lifestyle. So your investable net worth are only the assets that can create cash flow and wealth to pay for your lifestyle down the road. That means it's brokerage accounts, it's your retirement accounts, it's your rental properties, it's your business equity or your business interest. It's the cash set aside for investing it's those kinds of things. ETFs, index funds, all the things that can generate cash flow and support you down the road. Here's what it's not. It's not your home, because that's a lifestyle asset. It's something you're living in, okay? And it costs money. It's not providing you any income unless you decide to rent a room, which brings its own nuances and problems, okay? It's not your cars, it's not your boat. It's not your toys. It's not that peloton you use twice, okay? We measure investable net worth because it is the most important net worth when it comes to your money machine being able to pay for your lifestyle. So the investable net worth is the investable assets minus all your liabilities, where the total net worth is your total assets minus the liabilities. Okay? So now we have a snapshot, and you should be tracking this over time, but now you have a snapshot of where you stand. Now let's look at the next step. How do we build it? What should we be doing before the end of the year and going into next year to pick up additional income, to pick up additional wealth, to do that. So the next one, number four, is to capture all the free money. Okay, Listen, stop leaving $100 bills on the ground, because that's exactly what you're doing. This one's simple. If your employer offers free money, in other words, if your employer says, we will match how much you put into your 401k, 403b, 457b, and you're not getting 100% of the match, then this is your time to do it. Because think about this. When they say that we're going to match the money for you, that's as if they say, I'm going to put $100 bill on the floor. If you put $100 bill on the floor on top of it, you can take both of them. Why would you not do that? Okay, so if your employer is offering free money and you're not taking it, I don't know whether to bless you or bench you. It's free money. And this one, you have to get dialed in before December 31st. You can't wait till after the end of the year. You can't. It's not tax dates, not later, it's now, okay? And this year you have the ability to put, you know, in the 400, 401k and all that $23,000 away if you're under 50, if you're 50 or over, you can go to 30,500. So if you want to want the match, your money has to go in first. It has to go in this year. Okay? They're not going to give it to you and you cannot do it retroactively. Okay. There's another place that you can do this with and that is typically for those of you that work in a publicly traded company like my wife does, and that is an employee stock purchase plan. So if you're a participant in an employee stock purchase plan and your company gives you the right and the option to buy their Stock At a 10 or 15% discount, think about it. You can buy the stock for 10 or 15% off and then you can sell it and you made 10 or 15%. That's free money with a bow on it. Grab it. Okay. Now there may be some holding periods and things like that. You gotta look at it. But I want you to examine it, I want you to have that mentality and say I have time before the end of the year to, to take advantage of this. Okay? And then the third one here that I want to hit on is if you are participant in an hsa, a health savings account, high deductible health plan with a health savings account where the contributions are going through payroll. Okay. This one you can put money into, but it has to be done in the calendar year, only if it's through payroll. If you have your own personal hsa, you have a little more time. But if it is a deduction through payroll, you don't get any do overs. Okay? So this is the area that I would start to look at before we get into the next year to maximize the free cash or discounted cash that you're getting. That leads me to number five. And number five is to lock in your year end tax strategy. Yeah, this is adulting at an expert level because here's what happens. This is where you save a lot of money. Let's face it, if taxes can be anywhere from 25 to 55%, minimizing taxes is a huge benefit to optimizing our cash, our wealth this year and going forward. So the first thing I do here is I want you to review your withholding or the estimated tax payments you're making. First to see, am I under withheld? Do I need to give more money in order to make sure that I avoid penalties for underpayment under withholding or anything like that? Penalties and interest that could get, get hit with. So, so I'm going to look at it and see, do I need to make adjustments to make sure that I'm properly paid in to penalty prove me going forward. Now here's the other side of this because I hear this all the time, oh, I'm getting a big refund as if it's a win. No, a big refund is a mistake because that means that you gave the government more money than you needed to to pay your taxes. In other words, you gave the government an interest free loan. Okay, they're not going to send you a thank you card for that. They'll send you the refund. But I want to make sure that you're not over withholding either or overpaying tax either. So if your income went way down, maybe you shouldn't be paying as much in. Or if your income went way up, maybe we need to pay a little more in. So the first part of that tax strategies is projecting what you think your taxes are going to be and figuring out whether you have enough or too much withheld. The second thing is to look at where can I reduce the taxes as best as possible? And one of the places to look at from an investor standpoint is something called tax loss harvesting. If you happen to have stocks that have gone down, okay, losing stocks or losing positions, you could sell them to offset gains that you have. So if I have a stock like I sold some stock that I have, you know, some gains on and then we had some stock that we had losses on, we sold both and we offset it. So I'm not paying the tax on the gains and I get a benefit of the losses. And this is called tax loss harvesting. Now you do have to watch out for something called the wash sale rules, okay? If you sell a stock for a loss and you buy the same or similar Stock Back within 30 days, the IRS says no go, you cannot take a deduction for the loss. So you want to be really mindful of this. But I would look at your portfolios and say, are there things that I can harvest in here to make it happen? Now, just so you know, your losses are not totally deductible except to the extent that they can go over $3,000 over the gains. So if you have tens of thousands of losses, you're not going to get them all deducted in one year. You'll have to carry them over. The other thing with respect to gains and things to be careful of and to watch out for is this surprise mutual fund capital gain distributions. If you own mutual funds, these are the worst, okay? It's what happens that your fund could actually lose money, but you could get stuck with a tax bill because all along they're churning transactions and what ends up happening at the end of the year, they might rebalance a portfolio. There's some capital gains that come through and it comes through on a 1099 and you're not aware of it, okay? And now all of a sudden you have this tax bill. You got to pay on these gains that you never thought you had. So what we do at the, at this time of year is we actually look at the mutual funds that we might be in, we evaluate them, we look at them, and we have conversations with them to try and understand what the expected capital gains distributions are. So we can plan for it. Now, we can either avoid it or plan for it in that way. Don't get surprised by it. Okay? And then the last thing I think to consider here, there's plenty of other deductors deductions, and we'll talk about few, few of them as we come up, but is to consider the possibility of bundled charitable giving. Here's what I mean by this. That the standard deduction has been raised so much that many people can't itemize their deductions. And so making a charitable donation, for the most part, you don't get a lot of benefit of it. And now that the new rules give you some benefit, even if you're not itemizing, but by and large, you don't get some benefit of it. But what would happen is if you bundle your charitable donations into a single year, you might get more benefit by doing this. Watch what I'm talking about. Let's say you give $10,000 to a charity every single year instead of giving 10,000 this year and 10,000 next year. What if you gave 20,000 this year? So now you have a $20,000 deduction, 10,000 for this year in the charity's eyes and 10,000 for next year in the charity's eyes. But because you paid it this year, it's a deduction this year. So you bundled it and you got a $20,000 deduction, which should push you closer to getting over the standard deduction. And now you get more benefit from the charitable deduction versus if you did 10,000 this year and 10,000 next year. So I always will look at bundling my charitable giving to make that happen. All right, that leads me to number six. And number six is about maxing out or optimizing your tax favored accounts. Okay, this is, this is where we start to look at things even further. We've already said get the match, but now you look at things like the 401k, 403b and 457 and say, have I maxed out the limits, the 23,000 or the 30,500? And if not, maybe this is the time for me to do this. This is the employee portion of it. And you have to get this done by December 31st. It's a hard deadline. You miss it, it's gone forever. It includes simple IRAs, HSA via payroll. All those things have to be done here. But this is the time where I think that you start to look at it and say, I got the free money, I got the discounted money. I, I know what my net worth is. I know what my cash flow is. I've taken some tax structuring. Can I put more money into my benefit plans before the end of the year? Because that's the deadline to make sure that I get additional tax benefits and additional money working for me. Okay, now there are a few avenues that get you beyond December 31st that allow you to go to tax day April 15th. Okay? That is traditional IRAs, Roth IRAs, and SEP IRAs, or solo, you know, solo 401ks in a weird way. So, so here's what I mean by this. Even if you didn't do the other things, you could potentially put a traditional IRA in place and get a deduction. And even if you didn't put the money in by December 31, as long as you put it in by tax day, you will get a deduction. And the limits are this year, $7,000 for under 50 and 8,000 for 50 and above. Now, it's the same thing for a Roth ira. Now, Roth you don't get a deduction for, but you can get money in for 2025, even if it's April 2026. Now, there are some income phaseouts. So if you make too much income, you may not be eligible for a direct Roth contribution. So you have to be aware of those. And if you have too much income, then maybe you look at a backdoor Roth strategy. This is a little more nuanced that I'm not going to go into detail here, but you also have to be careful and get guidance on it because you can trigger attacks that you don't want to trigger. But bottom line is this. If you happen to miss the December deadline for some of these things, there is a possibility to get some deduction and some wealth benefit by contributing before tax day. A traditional IRA, Roth IRA, or a possible SEP IRA Solo 1 401k type of a thing. Okay, now that now allows us to look deeper into the portfolio. So number seven is about reviewing and rebalancing your portfolio for 2026. Listen, you did a risk profile and you built a portfolio based on your risk profile, or risk triad as I call it. And you built that portfolio. Well, your portfolio is like a garden. If you don't prune it, if you don't water it, if you don't trim it, it's going to become a jungle. So what we need to look at, think about this. You maybe you built a portfolio where it was 70% stocks and 10% in real estate and another 10% in different assets. And now the stocks really did well. And now instead of 70% stocks, it's 80% stocks. Well, that's not appropriate for the structure of the portfolio and your risk profile. You might have to adjust it. Okay, so we are always looking at the portfolio at least once a year, sometimes twice a year to rebalance it and reevaluate. Is this appropriate for my age, stage and circumstances? So the steps here would be this one. I want you to review your risk profile again. In other words, is your risk tolerance, your risk capacity and risk need hasn't changed. Had your circumstances changed that allow you to say, I'm going to be a little more aggressive, I'm going to be a little more conservative. And you adjust the appropriate portfolio structure to that risk profile. So number two is to adjust the portfolio structure to that profile. Now you look at your current portfolio and say, how does it compare? And if it doesn't match, then you change it by buying and selling. Now mind you, there may be tax implications there. You need to be smart about it. But what you're asking yourself is, does this portfolio that I have now match my real life going into 2026? Not your life from 2029, not your life from pre kids, not your I thought crypto was going to the moon life, but something that actually is based on where you are today and where you need to go. Okay, rebalance it. Trim the overgrown stuff. Make sure that your idle cash is working for you the way it's supposed to and realign it to your long term strategy. That's how adults invest. And then number eight, this one's a big one. And that is to make two to three financial declarations for 2026. Now you heard me correctly. I did not say goals, I did not say resolutions, I said declarations. Here's why I believe goals are optional. I Believe that they're fluffy and fuzzy, because how many times have we set goals, set news resolutions, done the things, and then a few weeks later, I missed it. So you kick it down the road and you don't do it, and it just happens. I don't want goals. I want declaration, because declarations, our commitments. When you say to the world and to yourself, I declare that I will invest 20% of every dollar I earn next year. That is a declaration. That is not a wish, a want, or anything else. It is a declaration, okay? I declare that I will eliminate destructive debt forever. That will change your financial makeup. I declare that I will hit $500,000 in net worth. See, that's where we start to shift things. It's not saying I want $500,000 in net worth, because saying that you want it is one thing that's an interest, but have you committed to it? That's a behavior that's different, okay? See, when you make a declaration, okay, you are declaring to yourself and the world about the things. That's why I'm saying only two to three. Because you can't have 10 declarations and think you're going to satisfy them. This becomes something at the identity level of your personality. Your identity then drives your behavior, and your behavior drives your wealth. That's the game you're playing. Declare it and make it real. That's it. And so I would declare two to three things, financial things that you want to accomplish in 2026, and make them real and visceral and commit yourself to it. It is a declaration, not a goal. Goals are optional. Declarations are commitments. All right, so let's bring this home. Here's the thing. Some people will say, well, I don't even know where to start. I got you. I want you to start by maybe taking my Financial Freedom Zone quiz. It's totally free. It'll evaluate where you are on this financial journey, what you need to focus on, what your next steps are. You'll get a report from it. Everything's totally free, and it's simple to do. It's 90 seconds, two minutes to do the questions. You can go to your financial freedomquiz.com and we'll hook it up for you. Here to do it. Get your zone, get your clarity, get your momentum. So where do we go? Well, you've got a handful of weeks before the end of the year to maximize and optimize what you can do for this year, but also to set up your mindset and everything for the coming year. Most people will drift into, into the new year, hoping something magically changes. But hope is in a strategy. Moves are. And you, you're making moves. You're taking control. You're doing what most people won't. And that's why your life will look differently. Do these eight steps, make the declarations, take the quiz, and walk into 2026 like someone who's not reacting to life, but directing it. Because money isn't just about dollars. It's about dignity. It's about peace, it's about options. It's about living a life you actually want. That's the game we're playing. That's why these eight steps mean so much. And that's why we. We have this channel. That's why I do what I do, because I truly believe that you need to be on the path to financial freedom because it is your birthright, and I want to light the path for you to get it. We just got to go out and claim it. That's what I why I do everything I do. So I hope you found this valuable. I hope that you will take these to heart and actually go do them. In fact, do me a favor, comment and leave me a note. Send me a DM on which one of these you're going to start with first. Let's get it, get it in, get it done. And if you have questions, send me a note on that. Let me support you in this journey. You do not have to be isolated. You do not have to be siloed. You do not have to do this alone. That's why we do what we do. All right? In the meantime, if you haven't subscribed, make sure to subscribe to the channel. It'll make me happy, it'll make YouTube happy, and the content will make your life happier. All right, let's go do this. In the meantime, until I get a chance to see you in the next one or on your path to financial freedom. As I always say, always, always strive to live a life that loves you. See you. Thank you for listening to the affluent entrepreneurship with me, your host, Mel Abraham. If you want to achieve financial liberation to create an affluent lifestyle, join me in the affluent entrepreneur Facebook group now by going to melabraham.com and I'll see you there. And that's it for this episode of building your money machine, where we help you learn how to master your money, eliminate financial stress, and live a life of choice. If you found this valuable or helpful to you, here's what I'd love for you to do. If you do me a favor. Go to Apple, Apple Podcast, or wherever you're listening this podcast and rate and review the show. It helps us tremendously to keep us at the top of the list so we can continue to get this information and this message out to people. Because I truly believe that financial freedom is your birthright and I want to help each and every one of you claim it. Thanks so much.