Kick Off The Year With This 7-Step Financial Action Plan

How do you see yourself in 2020? If your vision is of a more financially savvy you, then read on. This 7-step financial action plan will give you the tools to make this year — and decade — about your financial wellness. The best part? It’s easy!

1. Download Your Annual Free Credit Report

Credit report errors are more common than you might think, and errors negatively impact your credit score. A study by the Federal Trade Commission found that after addressing errors, one in five people boosted their credit score enough to enter a better credit risk tier, which means they qualified for a lower loan interest rate.

Common errors include duplicate accounts, closed accounts reporting as open, accounts belonging to someone with a similar name as yours, accounts reported incorrectly as late or delinquent, and instances of identity theft.

Making a habit out of reviewing your credit report every year is great way to keep on top of any errors and help protect your credit score. Never pay someone to clean up your credit report — you can access your report and fix errors for free. 

If you have HomeFREE Checking, an annual credit report and continuous credit monitoring is included with your free Identity Theft services. You can also order your free credit report every 12 months at www.AnnualCreditReport.com, a service authorized by federal law thanks to the Fair Credit Reporting Act.

If your credit report has errors, notify the credit bureau (Experian, Equifax, and/or TransUnion) in writing. They have 30 days to research and remove incorrect information.

2. Review Your 2019 Budget & Goals

Your budget is a financial road map, and whether you’ve kept one for years or just recently started, it’s a good idea to cap off the year with a review. You’ll be able to get a sense of your long-term spending habits and progress in your savings goals.

Celebrate your successes, and don’t be discouraged if you didn’t do as well as you’d hoped in certain areas.

Instead, look at it constructively — what did you learn, and how can you improve next year? What new tools or strategies could you benefit from using? If you’re not sure where to start, you might benefit from SESLOC’s Money Coaches, who can help you plan and stay on track.

If you haven’t started a budget yet, start one today and take a big step towards ringing in a financially healthy new year.

3. Adjust Your 2020 Budget & Goals

First, take what you learned from your 2019 budget to adjust your spending plan.

Next, set your goals for 2020. Do you need to increase your emergency savings? Planning on buying a new car soon, or simply know this is the year for new tires? Are you hoping to take a vacation this summer?

Experts recommend making SMART goals, which are specific, measurable, achievable, realistic, and time-based. By considering these five components, you’re not just setting a goal, you’re setting a plan for how to get there.

Determine how much you need to save and by when, and work your savings goals into your budget as “payments” to yourself.

4. Top Off Your Retirement Accounts

If you didn’t max out your IRA contributions for 2019, you actually have until April 15, 2020 to do so. The contribution for 2019 is $6,000, or $7,000 if you’re over 50 and making catch-up contributions. These limits will remain in place for 2020.

As you move into the new year, you might also want to consider increasing your 401k contribution, especially if you aren’t maximizing your company’s matching program.

No matter what your retirement savings goals are, at a minimum you should plan to fully utilize your employer’s match. While many programs have a vesting period, in which the percentage of their contribution becomes “yours” over a period of time, the match is essentially free money for your retirement fund.

Employer sponsored retirement plans also allow you to stash away more for your golden years, with the 2020 limit of $19,500, or $26,000 for those over 50 (not including your employer match).

5. Check Your FSA Balance

A Flexible Spending Account (FSA) is a great benefit offered by many employers that allows you to save money by setting aside pre-tax dollars to pay for eligible medical expenses. However, FSA’s expire annually, and are use it or lose it.

Make sure you know the details of your company’s plan and what’s covered. Some plans expire on December 31, others give a grace period, and others allow a limited roll over to the next year.

If your FSA expired in December, make it a resolution to fully take advantage of it this year. Get your appointments penciled in now, and make a plan for what to do with the remainder at the end of the year.

If your plan has a grace period, it might be too late to get scheduled for a last minute eye or dental exam, but you can use your funds to order contacts, get a new set of glasses, refill prescriptions, pick up an emergency first aid kit, or stock up on sunscreen.

6. Get Organized for Tax Season

Although you might still have your holiday decorations up, there are a few things you can plan to do now (or soon) that will help make tax season a little more stress-free:

  • Locate and review last year’s tax return. Use it as a guide to make a list of all the organizations that you’ll be expecting required documentation from, like your W-2, any 1099’s for dividends, and so on. If you moved this year, make sure your new address is updated with everyone so there’s no delay in receiving your forms. These forms are typically submitted at the end of January, so act fact.
  • Make a list of all the receipts you’ll need for your deductions, then collect and organize them.
  • Pencil in an appointment with your tax advisor or CPA. Their schedules might book up quickly, and there are benefits to getting your taxes done as soon as possible. Besides avoiding any late fees and getting a quicker return, filing early can help prevent identity theft and tax fraud. Unfortunately, scammers take advantage of this time of year to file fraudulent returns to claim other people’s tax refunds.

7. Learn Something New

Mystified by what goes into a credit report, or wonder what estate planning is all about? This year, you’re going to find out — make a commitment to learn something new.

SESLOC understands that financial education is the foundation to financial wellness, which is why we offer free educational resources to our members and the community.

Every year we offer seminars in our branch on a variety of topics. Check out the schedule to see what topic is coming to a branch near you. In addition to the resources posted in SESLOC News+, we also host financial calculators and an online learning portal on our website, so you can boost your financial IQ anytime, anywhere.

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