Your 2021 Financial Checklist

Your 2021 Financial Wellness Action Plan

If your New Year’s resolution is to renew your focus on financial wellness, this 7-step financial action plan will give you the tools you need to succeed. The best part? It’s easy!

1. Check Your 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.

Thanks to the Fair Credit Reporting Act, you can order your free credit report from each of the three credit bureaus (Experian, Equifax, and TransUnion) every 12 months at www.AnnualCreditReport.com, a service authorized by federal law. Due to increased pandemic related fraud, Experian, Equifax and TransUnion are offering free weekly access to your credit reports through April 2021.

Download your reports and review all three for accuracy — please note that there may be some differences between your reports since creditors may not report to all three bureaus.

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. 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 2020 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. This is especially important this year since the pandemic has affected income and expenses for everyone.

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 this 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, use one of our budgeting tools to start one today and take a big step towards ringing in a financially healthy new year.

3. Adjust Your 2021 Budget & Goals

First, take what you learned from your 2020 budget to adjust your spending plan.

Next, set your goals for 2021. 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 2020, you actually have until April 15, 2021 to do so. If the pandemic has reduced your fuel and dining out costs, take this opportunity to redirect this money to your IRA. The contribution for 2020 is $6,000, or $7,000 if you’re over 50 and making catch-up contributions, and these limits will remain in place for 2021.

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 2021 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. This year is unique because of FSA extensions permitted by the CARES Act in an effort to provide additional relief for COVID.

Make sure you know the details of your company’s plan and what’s covered, as well as if CARES Act extensions were implemented. 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.
  • This year may have unique tax implications due to coronavirus relief, so professional guidance may be more important than ever. Pencil in an appointment with your tax advisor or CPA, since they their schedules might book up quickly.
  • File early. 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 score, or wonder what it takes to be financially prepared for a new pet? 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. We hope you’ll join us for our next webinar!

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