Take These 6 Financial Steps Before the Year Ends

Note from the Editor: This article was first featured on The Penny Hoarder.

With the year coming to a close, you're probably busy with holiday shopping, travel plans, or meeting work deadlines. Although adding more tasks to your to-do list may not be ideal, taking a moment for some financial reflection and planning is crucial before we welcome 2023.

These end-of-year money moves will set you up to tackle whatever comes your way in the upcoming year.

Step 1: Establish Your Financial Objectives for the Upcoming Year

As you look ahead to the close of 2024, what achievements would bring you a sense of accomplishment? Imagine reducing your credit card debt by half. Envision growing your savings to four or even five figures, or replenishing that emergency fund you may have tapped into this year.

To turn these aspirations into reality, set specific goals using the SMART method:

• Specific: Clearly define your objective.
• Measurable: Make sure you can track your progress.
• Attainable: Set realistic and achievable targets.
• Realistic: Ensure your goals align with your abilities and resources.
• Timely: Establish a timeframe for achieving each goal.

For example, a goal like "become financially secure" is too vague. Instead, opt for something like "save $5,000 in my emergency fund by the end of 2024." This kind of goal is specific, measurable, and timely.

Using the SMART approach brings clarity to your financial objectives, helping you allocate your resources and energy effectively in the coming year.

Step 2: Reflect on Your Expenses from the Past Year (and Be Honest)

We get it – this task might not be the highlight of your day. It's likely to be a bit tedious, but here's a quick tip: if you use your bank or credit card app, check out the graphs that break down your income into specific spending categories like food, entertainment, and household expenses.

Even without digital tools, reconciling your spending is crucial. Why? It's the key to discovering where your money is actually going. You might believe every penny is accounted for, but tracking your expenses could unveil a different reality. Maybe those scented candles you rescued from the clearance end caps at Target added up more than you realized.

If you're struggling to meet your financial goals and can't pinpoint why, understanding exactly where your money is going is the initial step to aligning your actions with your goals. Once you've got your expenses tracked, you're all set for the next step.

Step 3: Create a Budget That Actually Works

Hey, we get it. Budgets might not be everyone's favorite thing.

But here's the real deal – you genuinely need a budget. This post gives you five solid reasons why, from breaking the paycheck-to-paycheck cycle to pinpointing those sneaky overspending habits.

If you're a budgeting beginner, take a quick quiz to discover the perfect budgeting style for you. We've also laid out the most popular budgeting approaches, so pick one that suits your needs and personality.

Whether you prefer tech-savvy solutions with budgeting apps or the simplicity of an envelope system, there's something for everyone. Our motto: If it works for you, then it works.

Step 4: Check Your Credit Reports for Errors

When you scrutinize your credit reports closely, here's what you might discover:

Accounts that don’t belong to you: It's possible to find accounts on your credit report that actually belong to someone with a similar name. Do you, Karen Smith, really want Karen Smythe's overdue Dillards’ charge card on your credit report?

Unnoticed delinquencies: Perhaps your dentist’s office sent bills to the wrong address, and the unpaid bill ended up in collections, creating a negative mark on your credit report. You might not have been aware until your car loan or mortgage application was denied.

Outdated or incorrect account information: You paid off a loan last year, but it still shows as unpaid, or your credit card balance is listed much higher than it really is. These inaccuracies could significantly impact your credit score, and those three little numbers wield a lot of influence over your future credit access.

To address these errors, you can dispute them by reaching out to the relevant credit bureau. Here's how to get it done.

Step 5: Craft a Retirement Plan and Stick with It

We all know many people haven't saved much for retirement. Instead of being part of that statistic, why not make 2024 the year you take retirement seriously?

We've put together a handy checklist of seven crucial things you need to do if you're planning to retire this year.

If retirement is a few years away, decide on the type of retirement account that suits you. If your employer offers a 401(k), make sure you're signed up. And if there's a company match, contribute enough to maximize it—it's part of your compensation, after all!

If you have old 401(k)s from previous jobs, consider rolling them over into your new retirement account.

No 401(k) at your current job? No worries. Explore options like IRAs and Roth IRAs. This post can guide you through deciding among them.

Once your retirement account is set up, contribute regularly. Even if it's just $25 a month, every bit counts.

Step 6: Acknowledge and Celebrate Your Achievements!

While we've been discussing ways to improve in the future, we also recognize that you likely achieved some noteworthy things in 2023.

Perhaps you kicked off a side hustle that helped make ends meet.

Maybe you successfully saved some money, or you started delving into personal finance education—after all, you're here, right?

Take a moment to reflect on what you've accomplished in the past year, and let it sink in.

Now, carry that sense of achievement with you into the upcoming year, especially when faced with setbacks (because they're bound to happen).

Trust that by sticking to your plan, you'll relish that feeling of satisfaction again this time next year.