As we finally wave goodbye to 2020, it’s time to start ticking items off your end-of-year financial checklist.
The end of 2020 is (finally) coming to an end, and if you’ve found yourself breathing a sigh of relief, you’re not the only one. Whether you’re among those who have lost their job or business as a result of 2020’s nasty tricks or you’re simply sick of staying in your house all the time, most of us have suffered in one way or another.
But that doesn’t mean you should spend every last minute of this year closing your eyes and willing it to go away as quickly as possible. Give 2020 the best start possible by getting your personal finances in check.
Here are our top suggestions for your end of year money moves to make progress towards achieving your year end financial goals.
1. Check your subscriptions
With entertainment options severely limited this year, many of us found ourselves signing up for all kinds of services for streaming, gaming, reading, shopping, and more.
They might not cost much individually, but you might be surprised at the total monthly expenditure once you top everything up.
Do you really need Amazon Prime and Netflix? The New York Times and The Washington Post? Go through your subscriptions with a fine-tooth comb and cancel everything you don’t think you’ll miss – or try to renegotiate your rate, at the least.
2. Sign up for a side hustle
We get it — not everyone has time to become an Uber driver in their spare time or start a soap-making business. But not all side hustles have to be difficult.
If you sign up to a site like Swagbucks or Prolific, you can take part in small income-generating tasks when you can, with no commitment necessary.
Or, if you’re lucky enough to have more time, check out our other side hustles ideas.
3. Check Your Credit score
Sometimes, ignorance can be bliss — but not when it comes to your credit score. At least, not in the long run!
When you know how your credit history stands, you’ll have a better idea of which loans you can apply for (including mortgages and credit cards) and what rates you’re likely to be offered. Take a moment to review your credit report for any errors – and more importantly, start to make an action plan to improve your score in the future.
The good news is that finding out your credit score is easy. Just contact your credit card company to see if they’ll give it to you for free, or head to three major credit bureaus (Equifax, TransUnion, and Experian).
You can also access one free credit report a year from AnnualCreditReport.com, which allows you to check for any errors on your file.
4. Make a Plan to Tackle your Debt
If you're struggling with debt, you’re not alone — 2020 has been a tough year. But whatever situation you’re in now, try to make a plan for how you’re going to tackle your debt next year.
List out the details of all your debts, including the total loan value and the interest rate, and decide on your strategy.
Are you going to follow the snowball method, tackling your smallest debts first to give you momentum?
Will you refinance your loans to make them more manageable? If you're carrying debt, your financial plan should revolve around making payments on time.
5. Start Saving for Retirement
When you’re barely scraping together enough money to pay your bills each month and you’re not due to retire for another 30+ years, it’s tempting to push it right to the bottom of your priority list.
But this is a terrible idea. The longer you postpone making proper retirement plans, the more you’ll have to put aside each month to make up for time lost.
We’re not trying to scare you, but this is important. Is it possible to start a side hustle or cut expenditures so you can at least add $100 a month into your retirement account?
If you’re still struggling to save, you’ll probably appreciate our next suggestion.
6. Download an app that helps you save
Saving doesn’t come naturally to everyone — but it no longer needs to!
Apps like Acorns automatically round up spare change from your purchases, allowing you to build a savings pot effortlessly. Pretty smart, huh?
Withdraw the money at any point, or better, add it to your Roth IRA!
7. Switch your car insurance provider
It might seem inconvenient to switch your car insurance provider every year, but guess what? That’s exactly what the insurance companies want you to think. It’s actually a lot easier than most people realize, and a great way to save a few hundred dollars.
To find out how much money you could save, enter your zip code to get a free online quote — it’s completely free to find out and takes 2 minutes.
8. Use the Money in Your FSA
Setting aside money for health-related spending is a smart idea – aside from being a fantastic tax deduction. If your employer has given you a Flexible Spending Account (FSA) to cover your health care expenses, count yourself lucky. But if you don’t use all the money in the account by the end of the year, it disappears. If you have a Health Savings Account or HSA, the funds never expire.
Even if you don’t have a medical emergency, the end of the year is a good time to stock up on contact lenses or over-the-counter medical supplies.
9. Start Tracking Your Spending
We’d all like to save less and spend more. Even if you’re convinced that this is impossible for you right now, how can you know for sure unless you track your spending?
Whether you’d prefer to use an Excel sheet, a pen and paper list, or a fancy app, the most important thing is that you take action.
Once you know how much you spend, you can start figuring out how to spend less and put some money aside.
10. Review Social Security Benefits
Did you know that you can review your social security account online? This will let you see how much you’d be entitled to if you became disabled or retired, and your current earnings record.
It won’t take long, but it’s a great way to check that you're on-track and everything is as you expected. Social security income is an important part of your wealth management as you go into retirement, so it's essential to keep an eye on it once a year.
Start The New Year on the Right Foot
As you’ve probably realized now, this isn’t a list of things you do once at the end of 2020 and then forget about.
Rather, it’s about creating good financial habits that you can continue into 2021. Don’t just make a plan; follow it. Don’t just cancel frivolous subscriptions; avoid making new ones.
It won’t be easy, but it’s certainly worth it!