If you’re seeking the shiniest, savviest, most supercharged launch into 2021, this read is like your shiny red carpet.
Why? We see December as the perfect time to reimagine what you want your life — and your bank account! — to look like.
So whether you’re ready for a new job or just want to up your savings game, these seven steps will help you prepare for 2021 like a financial rockstar, no matter where you’re starting from. 😎
- Level up your job search (or job)
- Bust open your budget
- Set your savings goals
- Automate everything
- Perform a financial checkup
- Invest in your future
- Reflect on the past (and the future)
- Say hello to 2021
Level up your job search (or job)
The world changed a lot in 2020, and many businesses have changed with it. If you’ve experienced a job loss or reduction in hours due to Covid-19, you might be feeling ready for a fresh start, and you’re far from alone in that.
💪 Put into action: Level up your job search with these three ideas:
- Land a seasonal job: With the holidays coming up, many retailers are hiring extra hands. Even if the work isn’t exactly what you want to do, you can view it as a stepping stone: Maybe you’ll discover there’s room to move up, or meet someone who can refer you to a different opportunity. Either way, you’ll earn some holiday cash while you’re at it!
- Perfect your resume and interview skills: If you’re looking to rack up the interviews, this is the perfect time to take a peek at your latest resume. You can get a free professional resume review on Glassdoor, or optimize your resume for a particular job listing with Jobscan. To boost your interview skills, consider holding mock interviews with a close pal or family member.
- Seek additional training: If you’ve been itching for a career change, why not let 2021 be the year you make it happen? You could apply for an online education program in a high-growth field, expand your skill set with free Coursera or Udemy classes, or start training for a high-paying job that doesn’t require a bachelor’s degree.
Even if you kept your job during the pandemic, you can still find ways to grow in 2021. You could, for instance, take on additional responsibilities that show you’re ready for a managerial role, learn how to negotiate a raise, or network within your company for a new position.
Bust open your budget
At the end of the year, it’s always wise to review how much you spent — and where — so you’ll know how to spend more wisely in the years to come.
💪 Put into action: If you use a budgeting app or spend mostly on a credit card, download an annual breakdown that lets you analyze what you spent over the past 12 months — and contemplate what you’d like to change
You should also examine whether any minor expenses have added up over the course of the year. Two common culprits are bank fees and unused subscriptions (like that yoga app you still haven’t opened). To avoid those in 2021, consider switching to a bank with no fees, and use a tool like Truebill to cancel subscriptions or negotiate bills.
If you have no idea where your money’s been going, make that your goal instead. Vow to track your spending — it’s easiest to use a budgeting app — for the first few months of 2021. Then, once you get a clearer picture of your financial situation, you can create a budget that works for you.
Set your savings goals
December is a perfect month for dreaming and planning. So take some time to think about what you’re saving for in 2021 — and how you’re going to get there.
💪 Put into action: Rather than just saying your goal is to “save money,” decide on a set number.
For example, if you want to have a $1,000 emergency fund by January 1, 2022, you’ll need to save roughly $83 per month (or $20 per week). It may sound easy, but the more you divide up a big goal over time, the more realistic it can feel.
The next step? Open a high-yield savings account just for that goal. You can even open different accounts for different goals, each with a specific label like “emergencies” and “vacation.” For most, the top savings priorities should be building an emergency fund, paying off high-interest debt, and investing in retirement—in that order.
If you want to meet your financial goals with as little hassle as possible, you’ll need to learn the art of automation.
💪 Put into action: Once you’ve determined your savings goals, create a weekly automatic transfer from your checking account to your savings account.
For example, if you want to pay $50 toward your student loans with every paycheck, set up an automatic withdrawal for the day after your direct deposit arrives.
By automating your savings, you’re taking memory out of the equation. Not only will it take one thing off your mental plate, but it might also help you avoid late fees and interest charges if you accidentally miss a due date. While you’re at it, you can automate your bills, too: everything from your electricity to your car payment to your credit card bill.
Perform a financial checkup
Another way to prepare for 2021 like a rockstar? Run a checkup on your overall financial health.
💪 Put into action: Pay careful attention to the 4 areas below:
- Insurance: Make sure you’ve got Goldilocks coverage (not too much or too little) on your auto, health, renter’s, and life insurance policies. Also consider whether any other policies, such as disability insurance, are worth the money to you.
- Credit: Make this the year your credit shines! First, learn about the factors that determine your credit scores. Then check your scores and develop a plan for improving them, which might include paying off old balances, watching your utilization, or signing up for a credit builder credit card.
- Estate planning: Though it might not be pleasant to think about, creating a will is an important part of your financial wellbeing, especially if you have kids. Now is also a good time to update your beneficiaries for any investment accounts or life insurance policies, as well as take care of your “digital estate” by outlining your wishes regarding social media and setting an emergency contact for your password management system.
- Digital security: A little work to improve your online security now could save you a huge headache down the road! Sign up for a password manager, create complex passwords, and start using a VPN if you access your accounts over public wifi. If you don’t plan on applying for credit in 2021, you can also freeze your (and your children’s) credit reports to help avoid identity theft.
Remember: Just like with your physical health, a modicum of preventative maintenance for your financial health can go a long way. This kind of check up can feel like a lot, we know – but the sooner you take a closer look, the better.
Invest in your future
You probably know it’s important to save for retirement. You probably also know that the earlier you start, the less you’ll have to set aside. So, even if your budget is tight, we encourage you to consider your future as part of your 2021 goals.
💪 Put into action: If your employer offers a 401(k) plan, make sure you’re contributing enough to get the full match. If you don’t have a retirement plan at work, open a Roth IRA. Both 401(k)s and Roth IRAs are investment accounts that put your money into stocks and bonds, where it can grow over time.
With a 401(k), you won’t pay taxes on the money now; with a Roth IRA, you won’t pay taxes when you withdraw it in retirement. With either, you might be eligible for the Saver’s Tax Credit, which allows you to receive 10%–50% of your contribution back as a tax credit. If you fall within a certain income bracket and contribute $2,000 to retirement, for example, you could get up to $1,000 off your tax bill.
Reflect on the past (and the future)
For nearly all of us, this past year has held a lot of challenges. So before diving into 2021, some reflection time might do you good.
💪 Put into action: Think about what you’ve learned about life and money in 2020, and what you hope will be different in 2021. What do you crave more of? What can you cut out? How can you improve your financial wellness, while still being kind to yourself?
Don’t keep everything in your head, either. Get those thoughts out into the world by journaling, vision boarding, creating personal mantras, or holding a Zoom call with your besties to discuss your goals for the next 12 months. Then, set quarterly reminders to check on your progress throughout the year.