Easy New Year’s Money Moves Everyone Should Make

We made it! 2020 was a roller coaster, fam. The symbolic flip over to 2021 feels like a new start – a blank page. Even though pieces of the 2020 dumpster fire will inevitably come along for the ride, let’s channel that “new year, new you” energy into some easy New Year’s money moves.

As you look ahead toward this new year, what money goals do you have brewing? Are you ready to finish out 2021 in a stronger, more stable financial position than you started it? Let’s do this!

I chose some easy money tasks for this list – things that are simple to work toward with a low barrier to entry. But I also narrowed in on actions that will create maximum impact for you. Let me know what you think of this list of easy New Year’s money moves in the comments below!

Take a BREATH and find GRATITUDE.

Put your engine in neutral for some introspection and planning. When else will you have a moment to take a full, deep breath and think complete thoughts? 

Think back on what went well for you in 2020. Did you smash your savings goal or pay for something big (or small!) in cash? Open a retirement account? Maybe you and your spouse finally got on the same page about your finances. If you’re reading this, you made it through all of the challenges of 2020. Let’s celebrate that! In such a crazy year, it’s easy to overlook your accomplishments. No matter how big or small, take a breath and do a mini-celebration of your GREAT job. 

Let’s also take a moment and reflect on all the GOOD things in the world. Having an abundance mentality is the cornerstone of a healthy financial mentality, and gratitude is a huge part of that. Even when we don’t have all the money in the world, there are still things we can be thankful for!

Track your money.

My favorite phrase is “if you track it, you can control it”. That’s true for our physical fitness and nutrition, and did you know tracking your income and expenses can also help you stay accountable on your way to financial success? 

Knowing how much money is coming in each month and how much is going out (and where!) allows you to be thoughtful with what you’re investing in. Until we have a handle on the money coming in and out, it’s difficult to identify areas for improvement. I wrote a complete guide for tracking your money (with a free downloadable tracker!) to help make it a pain-free process. 

A few minutes each month is all it takes to have clarity and insight around your finances. Now that you have the numbers in front of you, you have the knowledge needed to set achievable money goals. Bonus points (you were waiting on those, weren’t you?): add on some time each month for a financial goals check-in with your spouse or partner.

Evaluate your largest expense categories.

In America, our three largest expense categories are housing, transportation and food. By optimizing our spending in those categories, we can have a serious impact on our financial journey.

I wrote a post with some creative ideas for minimizing those expenditures. I promise you, friends, if you want to see the biggest increase in your monthly savings, take a stab at decreasing your housing, transportation or food costs.

Build your emergency fund.

If nothing else, 2020 taught us the importance of having an emergency fund. Crises in the form of pandemics pop up when you least expect them. Who knew!? 

The foolproof solution for any money anxiety is a healthy emergency fund. It’s a safety net and a fallback plan and a first line of defense and an insurance plan and ALL the other cliche metaphors. Rule of thumb says you should set aside about 3-6 months of expenses in an emergency fund. Once you track your expenses, you’ll know EXACTLY how much money you need to live on.

Remember, the previously-mentioned rule of thumb is not YOUR thumb. Set aside whatever amount makes the most sense to you. #Personalfinanceispersonal If your career field is more volatile, or you have more exposure to potential crises, pump it up to a higher amount. You do you, my friend. Do whatever allows you to sleep peacefully at night. 

The other thing to consider with your emergency fund is where it lives. We obviously want it to be accessible, but not TOO accessible. We don’t want to be tempted to dip into it for the new Louis Vuitton handbag. This is again a very personal choice, and depends largely on how you prefer to set up your finances. But I’d like to offer an idea for consideration. 

High yield savings accounts (like these) offer you a small percentage of interest for housing your money there. The interest rates are negligible right now, but much better than a standard savings account that earns zero interest. I also like that most are online and many offer you the ability to separate your money into buckets. So, once your emergency fund is fully stocked, you can designate a new section of your account for other goals, like “New car” or “Vacation”. It’s a powerful visual organization tool that can be pretty motivating.

Check your credit report.

Credit scores are based on 5 factors: payment history, amounts owed, length of credit history, new credit and types of credit. Bottom line? Your credit score indicates how likely you are to pay back debt. And it’s important, because if you have a history of paying back your debts in a timely manner, and have shown the ability to manage different types of debt well, you’ll be given better loan terms for things like homes or cars. 

On the flip side, if you have missed payments or collections accounts on your credit report, you’ll be less likely to be approved for mortgages or other loans. Or, if you are approved, the loan terms may not be favorable. Think higher interest rates. Ouch. 

Although credit reports don’t contain our credit score, they offer us plenty of other information we need. It’s important for us to understand what’s on our credit reports and to immediately address any incorrect information. If your lender is basing their decision on faulty information, you’ll be the one who suffers. 

Review your credit report even if you don’t need credit or don’t plan to take out any loans any time soon. Consider yourself a credit detective – catching fraud on your report will save you plenty of headaches later.

Go to Annualcreditreport.com to request your report. This can be done once per year for free. 

Make a plan for tackling your high-interest debt.

The truth about debt is that it is likely only a tiny part of your financial story; however, it’s an important one because it delays your investing timeline, limits your freedom of choice and takes an emotional toll. 

I wrote an entire guide to paying off debt, so I won’t belabor it here, but I do want to underscore the importance. If you have just $2,500 of debt at 12% interest, it can take THREE YEARS to pay off if you’re only paying the minimum amount each month. That’s three years of stability and growth you’re missing out on. 

Without that debt, you’d be able to take advantage of investing vehicles over a period of time to maximize your money and make it work FOR YOU instead of against you. 

Figure out how much you owe, choose a debt payoff strategy and let’s go to town! I believe in you and know you can do hard things. Blue skies are ahead, my friends. 

Start thinking about building multiple income streams.

Side hustles are all the rage, I hear. Sometimes the 9-5 just doesn’t scratch the itch (or fund that European vacation). Another lesson from 2020 is about risk mitigation. Earning money from multiple sources means an unexpected layoff and subsequent drop in income isn’t quite as painful. 

Dogsitting, selling things online, starting an Etsy store, freelancing, consulting, tutoring. All GREAT side hustles. But all require time to ramp up. Why not take some time now to build up your knowledge, your platform or your clientele roster? Better now than when your back’s against the wall. 

The added bonus? Here’s my cashback guarantee on this very free advice. I guarantee that in the course of pursuing a side hustle, you’re going to add to your skill stack, make new contacts and learn things about yourself. Even if you never make a dollar, those side effects are priceless. 

Immerse yourself.

Just like learning a language, immersion can be clutch to improving your personal finances. Whether you’re looking for motivation, information or a how-to, you can find it in readily-available personal finance content.

Challenge yourself to find 1-2 new personal finance blogs (don’t forget this one!), podcasts, social media accounts, Facebook groups, YouTubers or books. I made a list of all of my favorite personal finance books, so you can start there, or shoot me an email and I’ll happily set you up with other resource recommendations to help you on your journey. 

Don’t be an ostrich and bury your head in the sand. If you truly want to finish the year stronger than you started, surrounding yourself with entertaining and engaging personal finance content can’t hurt. 

In conclusion.

I truly, honestly, wholeheartedly wish you all the best in 2021. I wish peace and happiness and fulfillment for everyone reading this, and I can’t wait to hear about all the things you accomplish in the coming year. You are wonderfully made and you can do hard things. If you received value out of this list of easy New Year’s money moves, please share with your friends, and drop me a note in the comments below.

If you want additional ideas for financial steps to take in 2021, check out this post on the personal finance ladder – the new year is a good time to determine what ladder rung you’re on and start reaching for the next one!