Managing Your Finances: Top 5 things to do before the end of the year

Posted at 5:05 AM, Dec 22, 2020
and last updated 2020-12-22 12:03:12-05

(WXYZ) — As many Michiganders are still struggling to reclaim their financial footing, experts say easing the burden on your future entails putting a financial plan into place right now.

So where do you start?

7 Action News spoke to Robin Thompson of metro Detroit's MoneyWise Consulting for the top five financial things you need to do as we get ready for the New Year.
#1) Review your spending plan

"You really have to get clear on what’s a need," said Thompson. "What’s a want? What is truly essential?"

Now is a good time to evaluate your expenses. Figure out where you can cut temporarily. Good places to look include anywhere you’re sending an automatic payment. Think about any unused streaming service subscriptions or gym memberships.

#2) Make a plan to get out of debt

You want to list all of your creditors, all of your corresponding interest rates, and then really laser focus on the debts with the highest interest rates.

People should be allocating a minimum amount total of three months of essential living expenses for their emergency fund.

#3) Start building an emergency fund

"If you only have the ability to set aside $20 a week, don’t get hung up on the amount," said Thompson. "The habit is more important than the amount."

#4) Prepare for recovery

Mortgage-holding homeowners and students taking advantage of loan forbearance right now.

"Now is the time to pick up the phone and talk with your lender on how’re we gonna handle this?"

#5) Re-evaluate your retirement plan

"How did COVID impact your retirement savings," said Thompson. "You want to revisit your investment mix, just to make sure you’re on target for your goals."

So here’s the top 5 rebound rundown: create a new spending plan, manage your credit and debt, build out at least a three-month emergency fund, prepare for the end of loan forbearance, and review your retirement strategy.

One more thing to review as we head into the new year is your legal documents. Experts say organizing a living will, an estate plan and perhaps a healthcare power of attorney is not a bad idea amid a pandemic when health should be top of mind.