Time flies, and the end of the year will be here before you know it. Now’s the time to make a few smart money moves before 2020 comes to a close.
Here are eight strategic steps you should take if you want to start 2021 strong.
1. Spend the Money in Your FSA: Don’t Let it Go to Waste
If you have a Flexible Spending Account through your employer as part of your health insurance plan, remember this key fact: The biggest drawback with an FSA is that you lose whatever money you don’t use up by the end of the year.
You can pull money from your FSA to cover the cost of prescriptions, office visit copays, over-the-counter medical supplies, eyeglasses or contact lenses. Your account typically comes with a debit card you can use to pay for medical expenses whenever they come up.
Tick tock! Use it or lose it!
2. Contribute to Your HSA: Don’t Miss Out on Tax Deductions
If you don’t have an FSA, maybe you have an HSA, instead. That’s a Health Savings Account, and it’s also used to cover out-of-pocket medical expenses.
The goal of an HSA is to help people offset the cost of high-deductible healthcare plans. They help make healthcare affordable for families who struggle under the burden of insurance premiums and deductibles that can run into the thousands of dollars.
An HSA has less of an urgent deadline because, unlike an FSA, whatever money you don’t use up this year rolls over into next year.
However, keep in mind that any money you put into your HSA before the end of the year is tax-deductible, which could help lower your 2020 income tax bill. You can contribute up to $3,400 per person or $6,750 per family to your account.
3. Start Investing This Year: Spend $1 to Own a Piece of Amazon, Google or Other Companies
The best time to start investing is now, not later. Don’t wait another year! Sure, the stock market can be volatile, but over time the value of your investments will go up.
You can start small, if you want. In fact, you can get started with as little as $1* with an app called Stash, which lets you be a part of something that’s normally exclusive to the richest of the rich — buying pieces of other companies for as little as $1.*
That’s right — you can invest in pieces of well-known companies, such as Amazon, Google or Apple, for as little as $1. The best part? When these companies profit, so can you. Some companies even send you a check every quarter for your share of the profits, called dividends.
It takes two minutes to sign up, plus Stash will give you a $5 sign-up bonus once you deposit $5 into your account. Subscription plans start at $1 a month.**
4. Check Your Credit Score: Add up to 300 Points
When it comes to your credit score, it’s important to stay organized and keep tabs on it. After all, it’ll play an essential role in any big purchase you want to make — whether that’s a home or a car.
So if you’re looking to get your credit score back on track — or even if it is on track and you want to bump it up — try using a free website called Credit Sesame.
Within two minutes, you’ll get access to your credit score, any debt-carrying accounts and a handful of personalized tips to improve your score. You’ll even be able to spot any errors holding you back (one in five reports have one).
James Cooper, of Atlanta, used Credit Sesame to raise his credit score nearly 300 points in six months.*** “They showed me the ins and outs — how to dot the I’s and cross the T’s,” he said.
Want to check for yourself? It’s free and only takes about 90 seconds to sign up.
5. Cancel Your Car Insurance: You Could Save $826/Year
To free up extra room in your budget for 2021, start by cutting back on your monthly bills — like your current car insurance.
In most places, it’s straight up illegal not to have it, so you’ve probably accepted that you’re going to pay through the nose for it. But you don’t have to.
A free website called Savvy will help you find the best rates — in just 30 seconds. In fact, it saves people an average of $826 a year.
All you have to do is connect your current insurance, then Savvy will search hundreds of insurers for a better price on the same coverage. It’ll even help you cancel your old policy and get you a refund from your current insurer. Best yet: This is totally free.
If you find a better deal, you can switch right away and don’t have to wait for your next renewal or even your next payment.
6. Take this One Step to Protect Your Family: Leave Them up to $1M
Have you thought about how your family would manage without your income after you’re gone? How they’ll pay the bills? Send the kids through school? Now’s a good time to start planning for the future by looking into a term life insurance policy.
You’re probably thinking: I don’t have the time or money for that. But your application can take minutes — and you could leave your family up to $1 million with a company called Bestow.
Rates start at just $8 a month. The peace of mind knowing your family is taken care of is priceless.
If you’re under the age of 54 and want to get a fast life insurance quote without a medical exam or even getting up from the couch, get a free quote from Bestow.
7. Ask This Website Pay Your Credit Card Bills This Month
You don’t want to drag your credit card debt into 2021 with you like some kind of giant financial anvil strapped to your ankle.
Your credit card company is just getting rich by ripping you off with high interest rates, but a website called AmOne wants to help. If you owe your credit card companies $50,000 or less, it’ll match you with a low-interest loan you can use to pay off every single one of your balances.
The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.
AmOne won’t make you stand in line or call your bank, either. And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes, and it could help you pay off your debt years faster.
8. Contribute to Your IRA
Would you like to retire someday? Sure you would!
If you have an individual retirement account (IRA) as part of your retirement savings portfolio, you’ll want to contribute as much as you’re able to it this year.
The maximum contribution for 2020 is $6,000, or $7,000 for those over age 50, and it’s fully tax deductible.
9. Cancel One of Your Streaming Services
Quarantine has many of us subscribing to multiple streaming services. But you don’t need to carry them all into 2021.
If you’re subscribing to Netflix, Amazon Prime, Disney Plus, Hulu and HBO, maybe it’s time to take an inventory of which subscriptions you’re actually using. Maybe it’s time to jettison at least one of them.
And if you still have cable, maybe it’s time to finally cut the cord and save yourself some money by going with a streaming service instead — just not too many of them.
Mike Brassfield ([email protected]) is a senior writer at The Penny Hoarder and is so looking forward to 2020 being over.
.*For Securities priced over $1,000, purchase of fractional shares starts at $0.05.
**You’ll also bear the standard fees and expenses reflected in the pricing of the ETFs in your account, plus fees for various ancillary services charged by Stash and the custodian.
***Like Cooper, 60% of Credit Sesame members see an increase in their credit score; 50% see at least a 10-point increase, and 20% see at least a 50-point increase after 180 days.
Credit Sesame does not guarantee any of these results, and some may even see a decrease in their credit score. Any score improvement is the result of many factors, including paying bills on time, keeping credit balances low, avoiding unnecessary inquiries, appropriate financial planning and developing better credit habits.