2020 has been a year filled with financial uncertainty for some. With 2021 on the horizon, it is important to review your end-of-year finances to prepare for the new year. Here are some ways you can tie up some loose ends to your finances so that you can have a fresh slate for January.
5 Things to Add to Your End-of-Year Financial Checklist
1. Check your credit reports
Every 12 months, you’re able to check your credit score with the big 3 credit bureaus for free. Your credit score can impact whether or not you can qualify for the loans you’re looking to borrow or determine the amount of interest that you’ll have to pay on a loan. It’s important to make sure that your credit report does not have any errors.
2. Get rid of the financial clutter
It can be easy to hold onto receipts to keep track of your purchases and think that you’ll keep them “just in case.” This can result in a pile of receipts that will accumulate large amounts of clutter. Take the next couple of weeks to organize and prioritize which records are worth keeping, such as bank statements or old bills, while properly disposing of receipts that you may not want to cling onto. By doing this, you’ll feel more organized and prepared for the new year.
3. Revisit your life insurance policies
Life brings unexpected events such as divorce and separation, bringing a new life into the world, or losing a loved one. When a major life event occurs, it’s important to update your life insurance in response to the event. You may need to adjust your life insurance plan by increasing the amount of coverage or dropping it altogether, or changing beneficiaries,
4. Look at automated options
Setting up automatic payments for routine payments will free up time that can be allocated to achieving your financial goals. If you’re worried about auto draft fees, it’s best to start with automating your savings account, and once that’s settled, prioritize one bill to start automating in the new year. By automating your account, your savings, you’ll be able to start saving towards your goal without having to constantly think about it, getting you one step closer to financial security.
5. Review your savings progress
With these uncertain times, you may have had to dip into your savings within the last year. Take a look at your current emergency and savings funds to determine where and what you’ll have to make up for in 2021. Start by determining how much you have contributed to retirement accounts, college saving plans and saving accounts, and investment accounts and subtract the total amount withdrawn from this number. This will allow you to determine your plan for the new year and help you determine whether you need to increase contributions to your 401(k), set up automations to your savings account or IRA, and more.
Let’s Start the New Year off Strong, Together
Are you ready to start setting your financial goals for 2021? Not sure where to start in managing your personal finances? Family First is with you every step of the way. Speak to an expert to learn more on how you can better handle your money to work towards saving for the future. Contact us today!