Simple Ways to Clean up Your Finances Now Before Another Year Starts
Taking stock of your finances at the end of the year is always a smart move, but it can seem overwhelming, so it’s all too easy to put off. If revealing your full budget for 2021 is too much right now, here are some quick ways to get started.
Confirm your contact information
Let’s start with the simplest task: if you moved in 2021, make sure your financial institutions and employer have your new address. The last thing you need to do is skip an important email and mess up taxes for 2021, so double-check.
Check your subscriptions and automatic payments
The recurring monthly payments can actually increase over time, so go through your subscriptions and ask yourself what you really need and can do without. Even if you only find one or two positions worth excluding, you will still free up some funds for other purposes, and this is always a good thing.
Repeat this process for any automatic payments and transfers, especially your Internet and / or cable TV bill. You can often get a lower rate simply by threatening to cancel the service , and if you’ve already done so, it’s still worth double-checking if your monthly bill is what it should be. Cable companies don’t always deliver on their rate cut promises, and automatic billing makes it easy to miss billing errors.
Update your bank passwords
Data leaks happen all the time, and if there is any personal data that you really do not want to compromise, then it is your bank login. Start the new year with a fresh set of passwords for all your financial accounts, ideally with a password manager . If you don’t already have one, you really should: Password managers not only make it easier to keep track of all your logins, they also encrypt your data to protect against leaks and hacks, and allow you to securely share account access with people who need it. Many companies offer discounted subscriptions this time of year too, so you can even get a great discount.
Clear the balance of the payment application
If you are using Venmo, Cash App, PayPal, or other payment apps, check if you have a balance. Most people – which means you’ll probably find some free money there. If you do, you can transfer it to a high-yield savings account, use it to pay off your credit card debt, send it to your local mutual fund, or just pocket it for a rainy day.
Check your savings and debt repayment goals
Whether you’re saving for retirement, paying off debt, or both, it’s a good idea to take stock of your progress this year. Have you achieved your goals? If not, what adjustments do you need to make in 2022?
Remember to also consider factors that go beyond your own habits, namely changes in interest rates. In 2019, high yielding savings accounts offered a maximum of around 2% per annum; due to the coronavirus pandemic, this number fell to 0.40% -0.60% per annum , and the Federal Reserve does not expect it to increase until 2023 . Meanwhile, only in the last two quarters, interest rates on credit cards rose by almost two percentage points , because, of course, it happened. If interest rates on any of your accounts have changed significantly this year, it’s worth taking a closer look to see if you can get a better deal elsewhere.
Prepare for tax season
As another December draws to a close, it can only mean one thing: tax season is approaching. Keeping your tax records in order (and talking to an accountant if you have one) will save you time and effort down the road.
If the IRS does not postpone tax day for the third consecutive year, the 2021 filing deadline is April 15, 2022. This is also the deadline for making tax-deductible IRA contributions, even if you are applying for an extension, so don’t wait until later. your contributions are too long.
If there is one thing to keep in mind here, it is that tidying up your finances doesn’t have to be a long and drawn-out process. Most of these tasks take only a few minutes to complete. Pick one or two to get started, take care of them and get down to business. You will start 2022 in a much better place.