Before the year comes to a close, there are some things you need to do before you kiss 2021 goodbye. Doing some year-end planning can prevent you from wasting money…and help set you up for success next year. Here are some financial tasks to add to your to-do list.
Review your budget
This year, some people have lost jobs, gotten higher paying positions or permanently work remotely now. As a result, your spending habits may have changed. Look at where your money is going and see what adjustments need to be made to your budget. If you never had a budget, now is a good time to create one. This will make it easier to save money and achieve your financial goals.
Set your goals for next year
There’s no need to wait until December to set your goals for the new year. Whether you want to start a small business, build your emergency fund or buy your first house, you’re going to need a good plan. Experts suggest setting SMART goals. That means your goals must be Specific, Measurable, Attainable, Relevant and Time-based. In other words, be specific about what you want to achieve, have a way to track your progress, be realistic about what you can accomplish, make sure the goal is worthwhile and set a deadline for making it happen.
Check your FSA balance
If you have a flexible spending account (FSA), check your balance. Whatever you don’t use by December 31st, you lose. Some employers give you a 2 ½ month grace period or allow you to carry over a maximum of $550. But if your employer doesn’t, you’ll need to spend the money before the year is over.
Review your credit report
Monitoring your credit is an important part of managing your finances. Reviewing your report shows you what lenders see, stop identity theft and help you identify and dispute mistakes. Normally, you can only get one free copy of your report annually from each of the credit bureaus. However, during the pandemic you can now get weekly online credit reports from Equifax, TransUnion and Experian at AnnualCreditReport.com.
Update the beneficiaries on your accounts
Death can happen anytime and it’s usually when you least expect it. If your family dynamics have recently changed, it’s time to update the beneficiaries on your accounts so your assets go to the right people. Do this for your bank accounts, retirement accounts, life insurance policies and annuities.
Get health coverage for 2022
No health insurance? Mark your calendar because open enrollment for 2022 Marketplace coverage begins November 1st. This year the enrollment period has been extended by 30 days to January 15, 2022. So, you have more time to review and choose health plans. However, you must enroll by December 15, 2021 for coverage starting January 1st.
Devise a plan to pay off your debt
Let this be the last year you struggle with credit debt. Look for ways to cut back your expenses or earn more money so you can use the funds to pay off your debt. If you have a high-interest card with a manageable balance, see if you can transfer your debt to a card with a 0% introductory rate. This will help you pay off your balance faster. Just be sure to read the fine print because there’s typically a balance transfer fee attached, and the rate will go up once the introductory period is over.
Get organized for the upcoming tax season
Missing receipts can cost you valuable tax breaks. Use our tax prep checklist to start getting organized for the upcoming tax season now. Having everything you need readily available will save you time, stress and make it easier to claim the appropriate tax credits and deductions.