Your Complete Financial To-Do List for the New Year

1. Review last year’s spending

Before you look forward, take a moment to look back. Go through your checking account and credit card statements to see where your money went last year. Identify your biggest spending categories and look for unnecessary expenses. You can use budgeting apps, like YNAB, to categorize your spending easily.

2. Set clear financial goals

Ask yourself: What do I want to accomplish, financially, this year? Clear goals will provide motivation and direction and also keep you on track. Some examples of financial goals include paying off debt, saving for a trip, building an emergency fund and increasing your investments.

Be sure to make your goals SMART: Specific, Measurable, Achievable, Relevant and Time-bound.

Once you’ve clarified your larger goals, break them down into monthly or quarterly milestones so you can track your progress on a regular basis.

3. Rebuild or start your emergency fund

An emergency fund is your financial safety net. Without the money to cover an unexpected expense, you can easily fall into debt when life happens.

If you don’t have a fully funded one yet, aim to build three to six months’ worth of living expenses. You can open a high-yield savings account to store your fund so it collects interest. It’s also a good idea to automate deposits so you never forget to feed your savings.

Start small — even $20/week helps.

4. Create or update your monthly budget

If you don’t have a budget, create one at this time. Here’s how to build a budget in five easy steps:

Track your expenses and income over three months.
Tally up the totals and subtract your expenses from your income to ensure you have enough to live on.
Next, divide your expenses into distinct categories, such as Rent/Mortgage, Car Payments and Groceries. Be sure to include savings and investments so you always remember to pay yourself first.
Trim your discretionary spending as necessary so you can comfortably meet all your non-discretionary expenses.
Assign a reasonable monthly dollar amount for each spending category.
Going forward, be sure to stick to your spending limits for each category.

If you already have a budget, take the time before the new year to review it and adjust it to reflect any changes in your life or income.

5. Check your credit reports and score

Credit impacts your ability to borrow rent, or even get hired. Before you usher in the new year, get your free reports from all three bureaus at AnnualCreditReport.com. Look for errors or signs of fraud.

6. Tackle high-interest debt

Start the year with a plan to pay down debt — especially high-interest balances like credit cards.

You can choose to use the avalanche method, in which you’ll pay off the highest interest debt first, or the snowball method, in which you pay off the smallest balance first. To speed up the process, allocate windfalls like bonuses or tax refunds toward your debt.

7. Maximize retirement contributions

Make retirement savings a priority, whether you’re just starting out or increasing contributions. Contribute to your 401(k), especially if there’s an employer match, or open/fund a Traditional or Roth IRA.

The earlier you invest, the more time your money has to grow.

8. Cancel unused subscriptions

Streaming services, unused gym memberships and mystery auto-renewals all add up to too many wasted dollars a month. Review your checking and credit card accounts to check how much money you’re spending on subscriptions and cancel any service you don’t really need or use. You can also consider bundling services, like internet, phone and cable, for increased savings.

9. Review your insurance coverage

Life changes — and so should your insurance. Before the new year, take the opportunity to reevaluate your health, auto, home, renters and life insurance policies. Make sure your coverage matches your current situation and if you feel like you’re overpaying, shop around for better rates or discounts.

10. Plan for major upcoming expenses

Look ahead at what’s coming this year. Think about your planned vacations, any major events happening this year, like a wedding or birth, and large expenses you can anticipate, like car maintenance and holiday shopping. Create a savings plan for these expenses by setting monthly saving targets towards these goals. To make it easier, open a separate account just for these savings goals.

Use our guide for your complete financial to-do list for the new year.