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I, like many people, had high hopes for 2020. And we all know how THAT turned out. ☺️

It’s been a difficult year for a lot of folks, but the one thing we’ve all come to recognize is that we are far stronger than we realize.

As we finish out the year, I want to share a few things I’m doing today to make sure that 2021 will meet the expectations I set for 2020.

Take Stock of Our Financial Situation

2020 has been extremely challenging, and when you’re just trying to survive, it’s easy to lose sight of the bigger picture. We’re taking a bit of time at the end of this year to look over our financial situation to get a sense of where we stand given all the turmoil.

One of the more surprising parts of 2020 was how the stock market plunged and recovered in such a shockingly short period of time. If you continued your regularly scheduled contributions, you may have come out ahead, since some of your contributions would’ve occurred as the market was at its lows.

If you aren’t sure how the stock market fluctuations have impacted your finances, review your financial situation. What have you been doing well, where do you need to improve, and how are you progressing on your goals?

If you intended to pay down debt in 2020, how successful were you? If you wanted to save more toward the future, were you able to make more contributions? What systems did you, or could you have, put into place to help you achieve your goals?

Plan and save for a big vacation.

Next, we find that it helps to have something to look forward to in 2021. While it could be a while before everything returns to normal, it helps us, as a family, to have something to work toward in the new year.

Like many families, we took no big trips in 2020. There were no summer vacations, no trips to visit my parents in New York, my sister in Boston, or my sister-in-law in Houston. We spent very little of what we had earmarked for travel. While some of that was diverted to more toys and entertainment at home, it was a small fraction of what we had planned to spend this year.

We haven’t yet told the kids (shhhh!), but we want to plan a trip to Disney next fall, and we will use the savings from 2020 to help pay for it. Disney isn’t cheap, but neither are flights to New York, Boston, or Houston!

I keep some of our savings goals in my Ally Bank Online Savings Account, because I can organize them into “buckets.” I have buckets for Occasions, Family, Home, Vacations, Emergencies, and Core Savings (the default).

The buckets help me organize my savings account without having separate accounts. Instead of it all being a lump sum, with me keeping track of balances elsewhere, I have buckets to help me visualize the balances, so it’s easier to reach my goals. As money comes into my savings account, I can have it automatically distribute to different buckets.

When you’re home for months, it’s good for morale to see a light at the end of the tunnel and have something to look forward to.

Simplifying Our Finances

As a father to four kids, time was already at a premium. With all of the kids home and half of them in “virtual school,” I’ve come to recognize that a lot of the financial chores I was doing were luxuries I could no longer afford, time-wise.

After drawing up our financial map, which is a quick drawing of all of our financial accounts and how they are interconnected, I’ve been aggressively closing any accounts I no longer use. If I can’t picture my finances in my head quickly, it’s too complicated for me.

This can be tricky when it comes to some accounts like credit cards, since closing an account may impact your credit score. If you have a credit card (or two) you don’t use regularly, it’s okay to leave the account open and the card in a safe place. If you really want to get rid of it, see if it can be combined with another card at the same issuer to hopefully limit the impact on your credit.

By streamlining your finances, you make them easier to manage and keep track of.

Automate absolutely everything.

We make sure that all our bills are paid automatically from our bank account or credit card. This includes utility bills, like gas and electric, as well as our credit card bills.

I still get the billing notifications, so I can quickly scan them, but the act of paying them is taken care of.

If you’re concerned about fraud, such as unauthorized use of your credit card, you can set up transaction notifications. Almost every credit card allows this. I get transaction notifications for any purchase over $0, and it’s surprising how quickly they are sent.

Sometimes it’s hard to remember what you purchased at the beginning of your statement cycle, especially if you buy a lot of things from a single merchant, but when the email (or text message) arrives immediately – it’s easier!

For us, it’s a far better way to detect fraud as quickly as possible. Also, it enables me to confidently set up automatic bill pay.

Check your credit reports.

Your credit report may contain an error that impacts your credit score.

As a result of the CARES Act passed earlier this year, you can get a copy of your credit report every single week from now until April 2021. Just head over to AnnualCreditReport.com and follow the prompts to get your reports.

You don’t need to check it every week, but I suggest you check it at least once a year. When I looked last month, I discovered an unknown phone number attached to my report and had it removed. In previous years, I’ve seen unknown credit cards, addresses, and phone numbers on my report. In each instance, they were removed fairly quickly. That’s not always the case though. Sometimes, especially if you’ve been the victim of identity theft, it can take several months to clean up errors on a report. That can be very stressful, especially if you plan on making a large purchase such as a car or a house.

If you plan on making a move in 2021, as many did this year, you’ll want to make sure your reports are accurate, so you get the best possible interest rate on your home loan. Checking them now helps ensure you have time to catch and fix any errors that may be lurking.

Shop around for lower insurance rates.

It’s always a good idea to shop around for your insurance policies every year, but it’s especially important this year because of the pandemic. If you used to commute to an office and now work from home, you could find yourself paying less on car insurance due to your lowered usage. Even if you continue to commute, you may find that your insurance company simply increased your rate faster than a competitor would.

By shopping around, you make sure you’re paying a fair market rate and with the tools available on the internet, it’s often very easy to find out what others are charging.

If you do start shopping around, make sure you take advantage of all the discounts being offered by companies. If you talk to an agent, ask them if there are ways you can lower your rates. They want your business, so they will try to find every discount you qualify for.

Finally, review your coverage levels to see if they are still accurate. You may find that you need more or less of a type of insurance because your life situation has changed.

What’s great about this step is that any savings you discover can go straight towards that trip you have your eye on!

Finally, before you go, if you wanted more ideas of things to do before the end of the year that’ll set you up for 2021, here are a few additional suggestions:

  • Rebalance your portfolios– The market’s behavior may have put your allocations a bit out of whack. If you haven’t rebalanced it to your target allocations, take the time to do so now. While you’re at it, harvest any losses you may have for additional savings.
  • Find other bills to negotiate– We discussed insurance, because it’s a big budget item, but you can try to negotiate any contract. Give them a call to see if you can get a better rate. Sometimes all it takes is a small threat to cancel and your monthly bill will magically shrink!
  • Try to find online training that complements your existing skills– If you find yourself with more time at home, look to take advantage of online training programs that can help your future earning potential. It can be anything from a formal degree program or certification to a less rigorous online training program, invest the time to improve.
  • Focus more on your physical and mental health– You won’t be faulted for letting your health slip during a pandemic, but there are ways for you to refocus on fitness and mental health. If you’ve never meditated, give it a try to see how you like it.
  • Consider supporting your favorite charity– Charitable organizations have been working extra hard this year, so if you’re in a position to give, consider doing so.

I know that 2020 has been rough and certainly didn’t go the way anyone was expecting. But we can still stop and take a deep breath and start moving forward again. I’m taking this time to recalibrate my finances and make sure nothing slipped through the cracks while I was distracted.


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Headshot of Jim WangJim Wang is the founder of personal finance blog Wallet Hacks. He uses his engineering background to demystify complicated financial topics to help you achieve your goals. Jim has been featured in The New York Times, The Baltimore Sun, Entrepreneur magazine, and more. He lives in Maryland with his lovely wife and four children.