The year is almost over — and what a year it’s been. You might be ready to kick 2020 to the curb, but we still have a few weeks left before we finally get to say “See ya, wouldn’t...

The year is almost over — and what a year it’s been.

You might be ready to kick 2020 to the curb, but we still have a few weeks left before we finally get to say “See ya, wouldn’t want to be ya” to one of the weirdest years ever.

And while we fully endorse spending most of that time stuffing ourselves silly with sugar cookies and binging on the Hallmark Channel’s holiday offerings, we also want you to take some time for reflection and planning before heading into 2021.

Grab a notebook and pen, set aside an hour or two and settle in with your favorite beverage as we walk through these exercises. Making these moves will help you handle whatever comes your way next year.

1. Set Your Financial Goals for the Coming Year

When you think ahead to the end of 2021, what would make you feel accomplished? What if you cut your credit card debt by half? What if you were able to boost your savings account to four — or even five — figures? Or build up that emergency fund you may have had to dip into this year?

Think about what you want to celebrate at the end of 2021, and then set some goals to help you get there.

We’re fans of the SMART method of goal-setting. A SMART goal is:

Specific Measureable Attainable Realistic Timely

For instance, “become financially secure” isn’t considered a SMART goal because it’s ambiguous.

On the other hand, “save $5,000 in my emergency fund by the end of 2021” would be considered SMART because it’s specific, measurable and timely.

By thinking through your financial goals in this way, you’ll have more clarity about what you’re actually trying to do, and that will give you a better sense of how to allocate your resources and energy in the year to come.

2. Review Your Spending Over the Past Year (and Be Honest About It)

OK, we know this isn’t going to be fun. In fact, it’s probably going to be pretty tedious. That’s why we suggest you put on your comfiest clothes, pour your favorite adult beverage and carve out some time to focus.

Here’s a shortcut: If you use online banking or an app like You Need a Budget or Mint, you likely have access to graphs that show how much of your income went to specific spending categories, like food, entertainment and household expenses.

However, you can still do this without digital tools — it’ll just take more time and elbow grease. This post offers some good tips to help you get started with expense tracking.

Why is this so important? So you know how you’re actually spending your money. You might think you’ve haven’t got a single penny to spare and that’s why tumbleweeds are rolling through your savings account, but tracking your expenses can reveal a different reality, one where you’ve actually spent quite a bit of money on, say, scented candles rescued from the clearance end caps at Target. (Not that we know anyone who does this…)

If you’re having trouble achieving your financial goals and can’t figure out why, knowing exactly where your money goes is the first step to bringing your actions in line with your goals.

Once you’ve tracked your expenses, you’re ready to move on to the next step.

3. Make a Budget That Works — Finally

Listen, we know a lot of people don’t bother with a budget. We surveyed 1,500 Penny Hoarder readers in April 2019 and found that 40% of them didn’t have a budget.

But you really, really do need a budget. This post outlines five good reasons you should have a budget, including helping you finally break the paycheck-to-paycheck cycle and identify where you’re overspending.

If you’ve never set up a budget before, read this step-by-step guide to budgeting for beginners.

We’ve also outlined four of the most popular budgeting styles. Look for one that best matches your needs and personality.

You can try out one of these budgeting apps we love, or go old-school with a pen and paper and set up a bullet journal, a budget binder or an envelope system.

Our motto: If it works for you, then it works.

But what if you’ve tried creating budgets in the past, and you always seem to blow them? Then now is the time to reassess your approach. It’s possible your previous budgets have been so unrealistic that, unless you lived in your parents’ garage and ate nothing but rice and beans, you were never actually going to adhere to them.

Be honest about what you’re capable of and what you need. If that means including a line item for clearance candles from Target, then so be it.

4. Pull Your Credit Reports and Examine Them for Errors

This is another task that should be part of your regular financial maintenance, but a lot of us either forget or we don’t really see the point.

But when you go over your credit reports with a magnifying glass, here’s what you might find:

Accounts that aren’t yours. It’s possible you have accounts on your credit report that actually belong to someone with a similar name. Do you, Karen Smith, really want to have the overdue Dillards’ charge card belonging to Karen Smythe on your credit report? Accounts you didn’t realize were delinquent. Maybe your dentist’s office repeatedly sent the bill to the wrong address until the unpaid bill wound up in collections, leaving a giant black mark on your credit report, and you weren’t aware of any of this until your application for a car loan or mortgage was turned down. Outdated or incorrect information about your accounts. Perhaps you paid off a loan last year that’s still showing up as unpaid, or your credit card balance is listed as being much higher than it’s ever been. These could significantly ding your credit score, and those three little numbers hold a lot of power over your ability to access credit in the future.

All of these errors can be disputed by contacting the appropriate credit bureau. Here’s how to do it.

Before you shrug this off as something that’s unlikely to happen, consider that one out of every five credit reports has a possible error on it.

5. Make a Plan for Retirement and Stick to It

We don’t have to tell you that a lot of people have not saved up much for retirement. All you have to do is read Dear Penny’s columns to see that.

Instead of becoming yet another statistic, why not make 2021 the year you finally take retirement seriously? (That goes for you too, millennials — don’t think we haven’t noticed that most of you are in your 30s now.)

We broke down the process of retirement planning into a five-step guide that’ll help you get started.

The first thing you’ll need to decide is which kind of retirement account you want to set up. These accounts provide tax advantages for contributing to them, so you’re paying less in taxes and saving for the future — definitely a win-win!

If your employer offers a 401(k), make sure you’ve signed up for it. And if your employer offers a 401(k) match, contribute at least enough to take full advantage of it. After all, that match is part of your compensation. You’re entitled to it!

And if you’ve left previous jobs with 401(k)s, roll them over to your new retirement account. The process can admittedly be annoying, but it’s well worth your time.

If you don’t have access to a 401(k), you’ve still got options, including IRAs and Roth IRAs. This post has a list of questions you should ask yourself when trying to decide among them.

Once you’ve got your retirement account set up, contribute to it on a regular basis. It doesn’t matter if you can only put in $25 a month  it all adds up.

6. Celebrate Your Wins!

We know this post has been all about how to do better going forward, but we also know you’ve probably accomplished some things worth being proud of in 2020 too.

Maybe you managed to juggle your full-time job while helping your kids with online schooling? Maybe you lost your job and started a side hustle that helped you make ends meet? Maybe you managed to save quite a bit of money? Or maybe you started educating yourself about personal finance — after all, you’re here, aren’t you?

Take a few minutes to think about what you’ve done in the past year that you’re proud of, and give yourself some time to really let that feeling of pride sink in.

And now remember that feeling throughout the coming year, especially when things get hard and you encounter setbacks (because you inevitably will). Trust that if you stick to your plan, you’ll get to experience that delicious feeling of satisfaction again this time next year.

Caitlin Constantine is a former editor at The Penny Hoarder.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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