Like most people, you're probably ready to say goodbye to 2020.
As you look forward to envisioning what your next year will look like, however, it's important to pinpoint what you do and don't want in your life. Perhaps you want to make 2021 the year you move into a new place, have a career switch, start building your family or finally pay off your credit card debt.
No matter what your goals are, it's likely that your finances will play a big part in achieving them. As you prepare to ring in a new year, experts agree that it's worth taking some time to reassess your financial situation.
"Especially after the year we just had, it is probably more important now to evaluate where your financial house stands," says Albert Lalonde, founder of Kaizen Financial Group.
End-of-year organization, such as updating your existing budget and retirement savings, can help set you up for financial success in the months ahead, especially in an unstable economy. While January calls for making resolutions, December calls for prepping your finances so you know how far you are from meeting those goals.
Below, financial experts weigh in on four smart money moves people should make before year's end.
Your first step of getting your finances in order for the new year is to understand where you are today financially.
"Make sure you know all your numbers," Lalonde says. This means looking at your budget, at both your monthly expenses and income, and seeing how that's changed over the pandemic.
For instance, if there are virtual fitness memberships you signed up for during the onset of the pandemic and haven't used lately, consider closing those accounts. See how you can curb your spending on basics, such as food. If you spent a lot on takeout and delivery this year, you can focus on cutting those expenses in 2021 and make a plan to buy groceries and cook at home. (Check out CNBC Select's ranking of the best credit cards for grocery shopping.)
In addition to helping you save, going through your budget can help you set goals and plan for the future.
"A new year is always a great time to assess your spending and expenses for opportunitiesto save more or accelerate your debt pay off," says Bola Sokunbi, a certified financial education instructor and author of "Clever Girl Finance."
And if you're married, Lalonde suggests talking through these numbers and your objectives together with your partner so you're on the same page.
Due to the ongoing economic fallout from the pandemic, you should keep in mind the unstable job environment.
According to the Organisation for Economic Co-operation and Development's (OECD) 2020 Employment Outlook, unemployment will remain high going into the new year with a jobs recovery not expected until after 2021.
"As we enter 2021, the economy is still reeling from the impact of Covid-19 and we are likely to continue to see economic impact until the virus is under control," Sokunbi says. "And, so as a result, it's important that individualsmake plans to create financial security for themselvesdespite the economic uncertainty."
Reviewing your budget will help you see where you stand, but then it's time to prep for the worst-case scenario. Sokunbi suggests starting to think about ways to create multiple streams of income in the event of a job loss.
"This could be getting a part-time job, starting a side hustle or even downsizingsomething you own," she says.
"Many of us have had a hard year," says Brian Allen, a certified financial planner at Pension Consultants and author of "Rewarding Retirement." "Financially, we may need to rebuild."
Expanding your emergency fund is a good place to start if you have any extra cash to set aside as 2020 comes to an end. The goal is to save at least enough to cover your core basic living expenses, such as housing, utilities, food, transportation and medicines.
However, it's likely you may not have that much money right now to put toward your emergency savings, and that's OK. In this case, try saving in a cyclical manner. This means that your savings ebbs and flows with your income stream if your cash inflow is inconsistent. For example, if you are making 25% less this month than you were last month, save 25% less than what you would. Making small goals for yourself, whether it's saving a specific dollar amount or a certain percentage relative to your current income, can help your savings stay consistent.
You can start with a small deposit into a high-yield savings account and then set up automated transfers from your checking into that account every month as 2021 begins. This way, you kick off the new year saving without having to think twice about it, and it will add up over time.
The best high-yield savings accounts don't require minimum deposits to open an account and have higher-than-average rates. Consider the Synchrony Bank High Yield Savings if you want easy access to your cash and the Varo Savings Account if you need extra help automating your savings.
The end of the year is always a good time to evaluate how much you are putting away for retirement no matter how far away it seems.
"Understandably this year, many of us have had to prioritize short-term financial needs above longer-term goals," Allen says. "Next to our home, our 401(k) plan is often our largest asset. How we manage it will determine whether we will havefinancial independence after our working years or struggle to pay the bills."
If you have some time off over the holidays, look over your retirement strategy, especially your contribution amount. To really benefit, you should be putting away enough in your 401(k) to meet your employer's contribution match if they offer one. And if you can afford it, consider making 2021 the year you max out your contributions.
If diverting money out of your paycheck leaves you with too little afterward, you may not yet be ready to up your contributions, but it's something to aim for as your income changes throughout next year. The general rule of thumb is to have at least 20% of your income go towards savings.
During this time, you may also want to re-visit your retirement goals, such as what age you want to retire at and what kind of lifestyle you want to have in retirement. To see how you stack up at your age against conventional savings guidelines, check out how much money you should have saved at every age.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staffs alone, and have not been reviewed, approved or otherwise endorsed by any third party.
See the rest here:
Financial experts weigh in on 4 smart money moves to make before the end of the year - CNBC
- FMO & IMO | Financial Independence Group, Inc - December 25th, 2016 [December 25th, 2016]
- financial independence - Good Financial Cents - December 31st, 2016 [December 31st, 2016]
- 8 Secrets to Achieving Financial Independence - January 4th, 2017 [January 4th, 2017]
- COLUMN-Millennial parents still like to tap the Bank of Mom & Dad - Thomson Reuters Foundation - February 7th, 2017 [February 7th, 2017]
- Republicans Move on Financial Deregulation; Fed Finalizes Stress Test Guidance - Lexology (registration) - February 7th, 2017 [February 7th, 2017]
- Millennial parents still like to tap the Bank of Mom & Dad - One ... - One America News Network (press release) - February 7th, 2017 [February 7th, 2017]
- Speaking of Women...Are We Really More Financially Independent Now? - Investopedia - February 7th, 2017 [February 7th, 2017]
- House Dems: Trump wants to put Wall Street first - The Hill - February 7th, 2017 [February 7th, 2017]
- 3 insider tips for achieving financial independence | The Motley Fool ... - Motley Fool UK - February 7th, 2017 [February 7th, 2017]
- The power of financial independence - KXAN.com - February 7th, 2017 [February 7th, 2017]
- Find out if you qualify for free tax preparation and financial advice - wtvr.com - February 7th, 2017 [February 7th, 2017]
- My Turn: Program provides a path out of homelessness - AZCentral.com - February 7th, 2017 [February 7th, 2017]
- Getting To Know You Tuesday: Elliot Dole - Forbes - February 7th, 2017 [February 7th, 2017]
- Millennial Parents Still Like to Tap the Bank of Mom & Dad - WealthManagement.com - February 8th, 2017 [February 8th, 2017]
- How to Prioritize Financial Goals When You Can't Do It All - Inside Higher Ed (blog) - February 8th, 2017 [February 8th, 2017]
- How to Modify Money Management After the Presidential Election - Yahoo Finance - February 10th, 2017 [February 10th, 2017]
- Congress could limit the Fed's independence and hurt the US economy - Washington Post - February 13th, 2017 [February 13th, 2017]
- Court Rejects Order Forcing Parents to Pay Tuition - Inside Higher Ed - February 13th, 2017 [February 13th, 2017]
- Syrian refugee families achieve financial independence in Alliston - Simcoe.com - February 14th, 2017 [February 14th, 2017]
- Sheroes Founder Sairee Chahal ventures for Women's Financial Independence in India's sometimes Suffocating ... - Plunge Daily - February 16th, 2017 [February 16th, 2017]
- Advocates say more women need financial independence: 'We really do need that extra leg up' - Globalnews.ca - February 16th, 2017 [February 16th, 2017]
- Surviving widowhood: Five tips to avoid financial hardship - Cincinnati.com - February 16th, 2017 [February 16th, 2017]
- Q & A with Sr. Maureen Gallagher, setting up financial independence paths for women in Mexico - Global Sisters Report (blog) - February 16th, 2017 [February 16th, 2017]
- The road to financial freedom - ABS-CBN News - February 18th, 2017 [February 18th, 2017]
- Byron Moore: Position, Pace and Power perform like a pro - Monroe News Star - February 18th, 2017 [February 18th, 2017]
- Cash Course - Binghamton University Pipe Dream - February 20th, 2017 [February 20th, 2017]
- Independence Financial Partners - SPECIALIZING IN - February 20th, 2017 [February 20th, 2017]
- 'Financial you' hits all bases, aligns with priorities, values - Lehigh Valley Business - February 20th, 2017 [February 20th, 2017]
- International Financial Reporting Standards - Wikipedia - February 21st, 2017 [February 21st, 2017]
- Opinion: Young adults need an easier path to financial independence - LSU Now - February 23rd, 2017 [February 23rd, 2017]
- Retiring in their 30s. Yep, they're doing it. - Crain's Chicago Business - February 24th, 2017 [February 24th, 2017]
- Successful Boomer Women Offer Financial Advice to Younger ... - Fox Business - February 24th, 2017 [February 24th, 2017]
- 'Thousands' of cancer sufferers forced to borrow money from parents because of financial difficulties caused by illness - The Independent - February 27th, 2017 [February 27th, 2017]
- Independence Contract Drilling, Inc. Reports Financial Results For The Fourth Quarter And Year Ended December 31 ... - PR Newswire (press release) - February 28th, 2017 [February 28th, 2017]
- Another way to measure retirement readiness: Your 'Power Percentage' - USA TODAY - March 1st, 2017 [March 1st, 2017]
- Oran Hall | Young cop seeks financial independence | Business ... - Jamaica Gleaner - March 6th, 2017 [March 6th, 2017]
- International Women's Day - Investing for financial independence - Simple Landlords Insurance (press release) (blog) - March 8th, 2017 [March 8th, 2017]
- Game of Thrones gave financial independence to actor Conleth Hill - Bollywood Life - March 8th, 2017 [March 8th, 2017]
- How to Leverage Your Small Business for Financial Success - Kiplinger Personal Finance - March 9th, 2017 [March 9th, 2017]
- A Struggle Back to Financial Independence After a Brain Injury - The Good Men Project - March 9th, 2017 [March 9th, 2017]
- Ten favorite personal-finance books - Christian Science Monitor - March 11th, 2017 [March 11th, 2017]
- Five facts about financial independence - finder.com.au - April 8th, 2017 [April 8th, 2017]
- Regulatory reform leads to financial independence - Argus Leader - Sioux Falls Argus Leader - April 8th, 2017 [April 8th, 2017]
- Mayor Berke's Council For Women Takes On Predatory Lending - The Chattanoogan - June 6th, 2017 [June 6th, 2017]
- Mayor's Council For Women Invites Public To Financial Independence Hearing On Monday - The Chattanoogan - June 6th, 2017 [June 6th, 2017]
- How I Reached Financial Independence By Age 40 - The Dough Roller - June 6th, 2017 [June 6th, 2017]
- Berz: High-interest loans can hamper financial independence - Chattanooga Times Free Press - June 6th, 2017 [June 6th, 2017]
- Financial tips, resources for college grads - WTOP - June 6th, 2017 [June 6th, 2017]
- Public invited to hearing on financial independence, high-interest lending - Nooga.com - June 6th, 2017 [June 6th, 2017]
- Financial Independence | Tardus | Retire Early | Wealth - June 6th, 2017 [June 6th, 2017]
- How to become financially independent in 5 years - Jun. 6, 2017 - CNNMoney - June 7th, 2017 [June 7th, 2017]
- House Republicans Vote to Strip Away Post-Financial Crisis Safeguards - Roll Call - June 8th, 2017 [June 8th, 2017]
- Auditor Independence Definition from Financial Times Lexicon - June 8th, 2017 [June 8th, 2017]
- Top 5 tips to achieve financial independence | Mpumalanga News - Mpumalanga News - June 11th, 2017 [June 11th, 2017]
- Two 6% dividends to help you achieve financial independence ... - AOL UK - June 11th, 2017 [June 11th, 2017]
- Sun Life kicks off Financial Independence Month with beautifully crafted short films - ABS-CBN News - June 13th, 2017 [June 13th, 2017]
- How to become financially independent in 5 years - CNNMoney - June 13th, 2017 [June 13th, 2017]
- Achieve financial independence with stocks by following this one ... - AOL UK - June 17th, 2017 [June 17th, 2017]
- I'll pursue financial independence for judiciary - Akuffo - GhanaWeb - June 20th, 2017 [June 20th, 2017]
- Baker awarded Helping Hands grant - Columbia Daily Tribune - June 22nd, 2017 [June 22nd, 2017]
- Baker awarded Helping Hands grant - Devil's Lake Daily Journal - June 23rd, 2017 [June 23rd, 2017]
- Porter's Five Forces can help you achieve financial independence ... - AOL UK - June 24th, 2017 [June 24th, 2017]
- You can achieve financial independence easily by using buckets ... - AOL UK - June 24th, 2017 [June 24th, 2017]
- You can achieve financial independence easily by using buckets ... - Motley Fool UK - June 26th, 2017 [June 26th, 2017]
- Greater savings options for feds draw praise, while move to cut their retirement looms - Washington Post - June 26th, 2017 [June 26th, 2017]
- Alabama one of the least financially independent states in the country - Birmingham Business Journal - June 26th, 2017 [June 26th, 2017]
- JL Collins' Tips for Achieving Financial Independence - The Dough Roller - June 26th, 2017 [June 26th, 2017]
- 3 steps to become wealthier and more successful - Ladders - June 27th, 2017 [June 27th, 2017]
- These 5% dividend yields could help you win financial independence - AOL UK - June 30th, 2017 [June 30th, 2017]
- Celebrating Independence - Jewish Link of New Jersey - June 30th, 2017 [June 30th, 2017]
- The easy way to financial independence - AOL UK Money - AOL.co.uk - AOL UK - July 2nd, 2017 [July 2nd, 2017]
- 5 powerful steps towards financial independence and retiring early ... - AOL UK - July 3rd, 2017 [July 3rd, 2017]
- Independence Financial Group - July 3rd, 2017 [July 3rd, 2017]
- Gain Financial Independence Attend a FREE Educational Event - FOX31 Denver - July 14th, 2017 [July 14th, 2017]
- CNNMoney readers react: She retired at 28 with $2.25 million - Aug ... - CNNMoney - August 6th, 2017 [August 6th, 2017]
- How to retire early with financial independence in 3 steps - NBC2 News - August 6th, 2017 [August 6th, 2017]
- Could this miner help you secure financial independence faster than ... - AOL UK - August 24th, 2017 [August 24th, 2017]
- Solutions 4 Financial Independence: 8/22/17 - WDTV - August 24th, 2017 [August 24th, 2017]
- The 7 Stages of Financial Independence | Radical Personal ... - July 30th, 2018 [July 30th, 2018]
- Financial Independence - August 3rd, 2018 [August 3rd, 2018]