It’s safe to say that 2020 has been a crazy year for most Americans! We have been dealing with the global pandemic, unprecedented job loss and volatility in the financial markets. The economic chaos caused by COVID-19 has capsized the financial plans of millions of people. As we head into 2021, now is a good time to get back on the right financial track. While it can be tempting to put off our personal finances, getting a head start now will set you up for success in the new year. Let’s take a look at some personal finance must-dos before the end of 2020 to help you finish financially strong.
Budget holiday spending
The holidays can be a major spending trap. Avoid overspending so you don’t derail yourself. Make a list for the people you need to buy for and put a spending limit on each individual. If you have a plan, you’ll be more likely to stay on budget and your wallet will feel less stressed.
Review your money goals
No matter where you stand in your personal finance journey, moving your finances in the right direction requires setting money goals. When it comes to saving, spending and investing, your goals need to be SMART – specific, measurable, attainable, realistic and timely.
Craft a savings plan for 2021
Once you set your goals, your next step should be crafting a savings plan for 2021 relative to where you are in life. You may be saving for your post-COVID vacation, maxing out your retirement, or building an emergency fund. You can factor all of these into your personal savings plan. If your goal is to save more money, an automated deposit into a separate savings account could be the right solution for you. Adding to your 401(k) each paycheck is another automatic savings strategy that can pay off in 2021 and beyond.
Use your flexible spending plan
If you contribute to a flexible savings plan, now is the time to use it since most flexible spending plans need to be used by the end of the year. If you are unsure of what rules your employer has in place, contact your HR department. Whatever you do, do not let these funds go to waste!
Consider your healthcare options
Healthcare has been a focal point during the pandemic. This year, more than any other year, it is urgent that you review your medical coverage for you and your family to ensure that no changes or additions are needed. Cheaper plans aren’t always better. Ensure that you are comfortable with your healthcare coverage rather than just reviewing in terms of your budget.
Strengthen your emergency fund
2020 has been a constant reminder of how critical it is to have an emergency fund. If you do not have an emergency fund in place, now is the time to take action. Analyze your expenses and deposit whatever you can into the automatic savings account discussed earlier. Most experts recommend keeping at least three-to-six months of expenses in an accessible account. Once you have an emergency fund in place, you will be more prepared to handle the surprises life throws your way without incurring additional debt.
Take a closer look at your debt
If you have any high interest loans, credit cards with high annual percentage rates or mortgages with high interest rates, this is a great time to review your options as rates are at record lows and balance transfers could work in your favor as many credit card companies offer an introductory 0.00% APR on balance transfers. Taking some time to shop around for lower interest rates could help you save money in 2021.
This year has likely been a challenge, but you do something to finish out 2020 strong and build momentum for success in 2021. If you have questions about your financial plan, Univest is here to help you achieve your financial goals. Call us today at 877-723-5571.
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