How to financially plan for the new year (5 steps + free worksheet)
In the latest episode of the Finance Girlies podcast, Emily and Cassidy offer a guide to setting your finances in order for the new year with five actionable steps.
They discuss clarifying financial goals, auditing financial accounts, checking major financial numbers, refreshing spending plans, and making a list of lingering financial tasks.
Throughout the episode, they share personal anecdotes and practical tips to help listeners implement these steps in a manageable and stress-free way. Plus, they offer a handy checklist to help you stay organized as you work through these five tasks.
✨ Grab your checklist here! ✨
00:00 Welcome to the Finance Girlies Podcast
02:05 Step 1: Clarify Your Financial Goals
05:35 Step 2: Audit Your Accounts
09:40 Step 3: Check In With Your Major Numbers
14:24 Step 4: Refresh Your Spending Plan
22:38 Step 5: List Lingering Financial Tasks
26:38 Final Thoughts and Recap
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Transcript
[00:00:00]
Emily: Happy New Year and welcome back to The Finance Girlies podcast. We're so glad you're here.
Cassidy: Today [00:01:00] we are going to be tackling what the heck you should be thinking about to organize your finances in the new year. And Emily and I both know that this time of year can be a bit tricky. A lot of times you feel like you have a zillion new goals and intentions all competing for your attention.
Emily: But regardless of where you are, our goal with this episode is to get your year off on the right foot with five areas of financial focus.
These are five things you can do in one day, if you want, and while it doesn't cover your entire financial picture, checking these things off your list can help you set yourself up for success before your new year's high runs out. We’ll also share some of our own routines to give you an idea of how these tasks can look in practice.
Cassidy: We'll also preface this by saying that we have taken these five things that we're about to go over and turned them into this really easy worksheet. Just go to the show notes below and you can download the worksheet there and it will give you, like, fun little exercises to go through to check all these things off your list. [00:02:00] So, with that in mind, Emily is going to start us out with step number one.
Emily: Yes. Step number one is to clarify your financial goals. So this can happen in a journal if you're managing money by yourself or as a conversation if you manage money with a partner. But the goal here is to think about what you want your money to do for you this year. So, for example, if you know you want to take a vacation over the summer, maybe move to a different apartment, max out your retirement accounts, whatever it is, just think about what it is your money is going to be doing for you in 2025.
So doing this can really help you focus your efforts when it comes to budgeting, saving, investing, spending, and like, getting really clear about what you want to do so that the constant distractions, which are everywhere, aren't as [00:03:00] distracting. For example in having a conversation with my husband earlier this year when we were kind of going through a bit of this exercise, we kind of went through, like, the potential trips we wanted to take this year, and actually broke each of them down into what kinds of activities we'd want to be doing, how we would get there, when we would go, and went as far as to, like, make a rough budget for each of them, so we could actually see what we would need to be saving in order to make these things happen. And so that was a process we went through as part of clarifying our financial goals.
Obviously there's, there's more to our goals than just travel, but that was a really like, tangible step we took and that helped us kind of like map out, okay, what is reasonable for us to plan for this year and what maybe should we think about putting on hold until next year so that we can reach our other goals, like investing and saving and those kinds of things.
Cassidy: That's actually a really beautiful example [00:04:00] of just creating fun goals that excite you versus all of the like, canned things that you think of when you think of financial goals. Because, I think a lot of times if the idea of setting financial goals doesn't sound fun to you, it may be because you're choosing goals that don't really like, align with the life you want to live.
So the most prevalent example that comes to mind is I feel like every adult is like, I should save up for a down payment on a house, you know. But I think it's also equally important to stop and ask yourself, do I even want to own a home? Am I fine continuing renting? Right? Renting gives me the option to move anytime I want without having to sell property. I'm not responsible for the upkeep of that property. So like that's one example.
Emily: It's funny you bring that up because when we were going through this, we kind of tried something new this year where we were like, okay, what do [00:05:00] we see ourselves doing in five years? And then like worked backward from there to kind of get a little more clarity for like the next one year.
But yeah, one of the things when we were talking about five years out, we both agreed, we might still be happy living where we're living. Earlier, you know, a few years ago, we did not think that'd be the case, but now that we're here, we're really settled and love where we live. So, yeah, that's why it's important to do this every year because those visions change.
Okay, what's step number two?
Cassidy: The second step is to audit your accounts. And essentially, we just want you to take stock of where your money is going and make sure that that money is in accounts that are working for you and not against you. For example, you could audit all of your current accounts. That includes your checking account, your savings account, your credit cards, your investment accounts, and be like, are these accounts I actually like? Is my savings in a high yield savings account [00:06:00] that is earning a decent interest rate? This is something that Emily and I talked about in Episode #4.We did a whole Q&A on bank accounts and high yield savings accounts. You can go back and listen to that if you want to learn more about that.
You can also look at your credit cards and be like, are there any credit cards that I'm not really using, but I'm paying astronomical annual fees for that I could no longer, you know, spend money on?
I know one for me personally, I have a solo 401(k) with a company that I don't really like anymore. So one of my things as I audit my accounts for this year is going to be to find a new place to roll over my solo 401(k) to.
You can also look at any new accounts you need or want to open this year. For example, maybe you've been putting off opening an IRA or another specific investment account. Maybe you've been putting off opening a high yield savings account. Those can all be examples of that.
And then also just closing any old accounts. [00:07:00] Like, do you have a random checking account from when you were a teenager that’s still open even though it’s been empty? Right, like, can you go ahead and close that out, different things like that.
So step two is really about taking stock of all of the financial accounts that you currently have or ones that you think that you may want to open in the next year and just making sure that you're actually happy with those.
Emily: I don't know. I think we've talked about this before, but like a great resource for this, if you're overwhelmed by the structure of your accounts and like outside of bank accounts, what do you actually need? I find Ramit Sethi's account structure in his book, I Will Teach You to Be Rich, super helpful.
And actually he just came out with a new book for couples that has a similar kind of structure outline. So if you're like, what the heck do I need? That is a resource I highly recommend. And find really helpful.
Cassidy: Very cool.
Emily: And I also wanted to ask your thoughts on this, Cassidy. Have you ever closed an old credit card that you no longer [00:08:00] use?
Cassidy: I have. And I know that there is mixed feelings and advice on this.
In my experience, I'm someone who feels very easily overwhelmed by having too many accounts to manage.
Emily: Yeah.
Cassidy: To me, just like the mental peace of mind of knowing that I don't have to keep tabs on whether that credit card number has been stolen or if there's fraudulent activity on the card or anything like that, I was like, it's rebound. I will say I was fairly young, like probably mid-twenties when I closed out some of my older credit cards. So realistically, my credit history wasn't that old. Now that I'm in my thirties, you know, some cards I've potentially had a decade or longer, I might would look into it in more detail and try to figure out exactly how it would impact my credit score and whether it's worth it.
Emily: Yeah.
Cassidy: What are your thoughts? Have you ever done that?
Emily: I haven’t, but it’s something I’ve been thinking about recently while I've been like doing this audit of my accounts, I feel like, there's like [00:09:00] one card in particular that I'm like, I really, I don't want this anymore. And so, yeah, that's been on my mind. I have heard like, if, cause, cause I often hear like, you know, don't close those old accounts, but I've heard that you can kind of offset the dip in your score by requesting higher credit limits on the cards you do keep.
I don't totally know, like, the details of that, but just something that's been on my mind. So, I imagine it's on some of our listeners’ minds too.
Cassidy: Yeah.
Emily: Well, there's a lot to consider there, but I think simplification is, and just making sure your accounts work in your favor, is like the main goal.
Cassidy: Mm hmm.
Emily: Okay. Let's move on to number three, which is to check in with your major numbers. So your major numbers are the numbers that when you look at your entire financial picture matter the most. So things like your savings goals, your investment and retirement account balances, [00:10:00] your emergency fund balance. If you're carrying debt, what's that balance? And then what is your timeline for paying it off? Knowing all of these numbers and like, seeing them all on one page or in one place, can give you a pretty good idea, just at a glance, of like, where you are in your finances, especially when you do this exercise again next year and looking back on the previous year, you can kind of see the direction you've gone.
And I know, Cassidy, that you're really good about doing this.
Cassidy: Yeah, I was going to say, like, depending on where you are financially, this step particularly might be a little scary. So, for example, the first year I started really looking at my finances, I did the same exercise. It was around December, January, and I had already felt like my finances were kind of bad, you know, like I was a little afraid to look at them, didn't really know what was going on. And then [00:11:00] I looked at my numbers and I realized that my net worth was like negative $25,000, meaning I had $25,000 in debt, really no savings, like nothing was happening. And it felt scary to see those numbers, but it also gave me clarity on, like, why I was feeling so tense and out of control with my finances.
Emily: Mmm.
Cassidy: Anyway, taking stock of my numbers back then felt really scary, but it gave me a game plan like, after looking at those numbers, that's when I was like, okay, one of my goals this year is going to be building an emergency fund. Another one of my goals is going to be, you know, starting to chip away at some of this debt. All of my debt was student loans, so I didn't really have any high interest debt, like credit card balances to pay down. So I was like, okay, let me figure out which debt I'm going to pay off first. Like all of that spurred from looking at that first big number, which was just, what is my net worth? Like how much debt do I have in my name versus how much like savings and investments do I have [00:12:00] in my name? But fast forward, years later, and now I absolutely love taking stock of my numbers every year because it's just gotten better every single year. So I can look and be like, okay, I maxed out my 401(k) this year. My spouse maxed out his 401(k) this year. This is how much we saved in investments in total. Like, this is how much our net worth increased this year versus last year. And all that's really good. And then you can look at all of that stuff and make some tweaks from there. So.
Emily: Yeah, and I think one of, like, the major numbers that all of these things add up to but I didn't explicitly say is your net worth. So just to clarify I mean there are calculators you can use online. But just for like a simple formula, that would be your savings, your investments, including like any retirement accounts you have and any major [00:13:00] assets, so like a house or vehicles, and then from that, subtract any debt you have, and that should give you a pretty good estimate.
Cassidy: Yeah, I will also add that whenever you take stock of your numbers, it, you may all of a sudden get all of these ideas like, man, I really need a bigger emergency fund, and I really need to pay off all this debt, and I really need to start saving for retirement.
Like it can spur all of these really big goals that are honestly, very challenging to accomplish in one year. So the goal isn't to stress about perfection and to be like, I've looked at all of my big numbers and things look kind of messy. The goal is just to get closer to where you want to be. So like, you're not going to have everything figured out overnight. For sure. So for example, if your retirement isn't where you want to be, if you're like, I should really be saving more for retirement, then maybe you see if you can save 1% more for retirement this year than you did last year, or 5% more for retirement this year than you did last year. Or depending on if your [00:14:00] emergency fund is nonexistent, maybe you say my goal for this year is going to build a one-month emergency fund. So at least have that. And the next year you can focus on adding to it. So it's not to be like, there are all of these huge goals I suddenly need to accomplish this year. It's just like, this is my situation. What can I do to get one step closer to where I want to be this year?
Emily: Definitely. That's an important thing to remember. And I think, or not, I think you kind of like, dipped into the next step, number four, which is to refresh your spending plan. So you want to talk more about that?
Cassidy: Yeah. I was going to say they kind of bleed together and there were things I was holding off on saying in step number three, because it felt like they applied more to step number four. So yeah, step number four is just to refresh your spending plan and to make adjustments based on your goals. And this is something that I did with my spouse just two days ago.
We have been using the app, You Need a Budget, since we started budgeting together in, [00:15:00] I think, December 2016. So there is so much data in that budgeting app. And one thing I really love about it, this is like, not a sponsor or anything, Emily uses it too, we both love YNAB. But you can dig back into each of your spending categories and you can pull reports to find out, like, how much did I spend on groceries in 2023 versus 2024? How much did I spend on fun money like this year versus last year? And you can do that for any, any category whatsoever. So like rent, housing, transportation, subscriptions, grocery, haircuts, like anything, and it's so fun to kind of nerd out on all of that and to be like, okay, let's like, examine everything.
So just two days ago we sat down and looked at specifically, our biggest categories, like, how much did we spend on groceries last year compared to the year before? Come to find out, we spent a whole lot more on groceries last year and then we were trying to think of okay, we spent more, why was this? Some of it was out of control. Or, out of our control. You know, inflation, things are just naturally more expensive at the grocery store now. Um, but some of it was within our control. We tried some like, grocery subscription services, which are naturally more expensive than just getting those things at the grocery store.
I think I also bought more snacks and stuff like that. So then just being like, are we happy with how much we spent last year? Do we want to try to spend a little bit more this next year so we can reroute that money to other goals? And that is just one example.
Another example I can think of is we also we moved last year into bigger house and one of our goals in doing that was to replace some of our like old outdated furniture that we didn't love as much. Like we bought a new couch this year and things like that. So it's like, our random expense category was higher last year than it was in previous years, and most of that was from, [00:17:00] like, buying stuff for our house.
So then it's like, okay. This is how much we spent on that stuff last year. Do we think this is going to be an expense that continues this year? If so, do we want to spend less? Like, you know, you're just kind of thinking through, am I okay with spending how much I've been spending, or can I cut back in certain areas and reroute that money toward better things based on the goals that you've set for the year.
Emily: Yeah, I think it's just, it's a really good opportunity to, whether it's looking at your budget, like YNAB, or just like going through a few months of bank or credit card statements, and just like, seeing what you spent money on and looking for any purchases or spending that you just find you aren't enjoying anymore, you don't need anymore, they're not helping you reach any goals. And that's not to say, like, you need to go through and reroute all of your fun spending to, like, your new savings goals, but it's just a good opportunity to make sure you're not spending on things that don't matter to you [00:18:00] because that can change all the time.
So like, one example we came across when we were looking at our budget at the new year was, we've been spending a lot on streaming services over the last few months, and we don't watch a ton of TV, but the reason is because my husband loves watching football, and I do, to an extent but those streaming services are ridiculously expensive.
So as soon as the football season is over, that is something that's like, on our list to cancel immediately. And you know, then we'll redirect that money to something else. But. Yeah, those things can really add up, especially when you're not like staying on top of them. So you may find as you're going through this step that like, this might be something you even want to revisit in like, a few months.
Cassidy: Yeah, and you also brought up a good point that just because you cut something out doesn't mean that you have to cut it out for the whole year. Like, it can really just be for a season. And also your priorities [00:19:00] might change. You know, it's like you take that money that you are spending on streaming for football and you put it toward one of your savings goals. But then, you know, you give yourself permission to pick it back up again when football season starts in August.
Emily: Yeah, that's a good point.
Cassidy: Yeah.
Emily: Go ahead.
Cassidy: The other thing that I want to stress, similar to the last point, is that these do not have to be extreme measures that you take. I say this because it, it's always a big one for me, dining out for example. If you find that you're spending way more on dining out than you want to be, you don't have to be like, for this whole month, I'm not going to eat out once because at least for me, that would never happen. I will never in my life go a month without eating out, I don't think. But you could be like, can I trim this down by $50 for next month? And then, once, if that feels comfortable, knock it down another $50 the next month. So it's not to do this, like yo-yo back-and-forth, where you hit one extreme or the other. It's just like, how can I make these changes in [00:20:00] ways that feel doable, and just start there.
Emily: Yeah, yeah, that's really smart. One example of that to me, is like more intuitive, and I naturally do is like, working out. Like I know I'm not gonna do ever, I will never do like an hour long-workout. I’ll go for an hour-long walk, so maybe that's like something I do, or I'll do like a 15-minute workout and I can commit to that, I can do that almost any day.
So it's similar. It's like, don't try to go for the big thing if you know it's not going to work. Like, start small. You can always increase your goals or your savings rate or whatever.
Cassidy: Yeah. This is a little bit of a side tangent, but before Emily and I started recording, I was telling her that I just bought a walking pad. Because as someone who works from home, I'm stationary at my desk a lot of times and I know that I'm not walking nearly as much as I want to, or should, probably, for my mental health and general wellbeing, especially in the winter in the PNW [00:21:00] where it's like rainy and you know. All of that stuff. But initially I was going to be like, I have this walking pad, like, my goal is to walk 10,000 steps a day, every single day this year. And I was like, that sounds nice in theory but is never gonna happen in real life. Um, so I’ve settled on trying to walk 10,000 steps every day for 30 days, but honestly, I’m like, should I even step it back and be like, let’s start with 10,000 steps for 10 days and then adjust from there if you need to. So it is just all about making your goals feel more manageable and not overwhelming yourself. Like, it's good to have those moonshot goals of like, this is what I would like to do. And speaking of moonshot goals, this is actually what I do with my freelance income every year. I usually set two income goals for the year. One is a moonshot goal. Like, it would be amazing if I was able to make X amount of money. But then I set a realistic goal that feels like something that would still be exciting, but is also good enough.
I'm like, if I hit this goal, that's perfectly fine. And that feels really good too, because for years I was only setting a moonshot goal. Like, I want to grow my income by $50,000 more or make $50,000 more than I did last year. and then I would be disappointed in myself if it didn't happen. You know, so now I'm like, let's see if you can make, I don’t know, $5,000 more than last year.
Emily: Mm hmm.
Cassidy: And if you do that, that's good. Even if you make the same amount of money as last year, that’s good.
Emily: Mm hmm.
Cassidy: So, my goals have like, shifted a little bit in that regard.
Emily: Yeah, I think mine have too, and it's always a good reminder because I do forget that sometimes.
Okay, moving on to our last step, number five. Which is, make a list of lingering financial tasks that you need to do in the next three months. This is super helpful because as you're kind [00:23:00] of auditing your accounts, looking at your spending plan, doing all these steps, there are going to be things that they're just, they're not going to be doable right away, or they're going to be too overwhelming if you're trying to do them all at the same time.
At the beginning of the episode, we said, you know, you can do these five steps in one day, and we stand by that, but step number five is to just make a list of the things you didn't get to, because you want to make sure you get them out of your head into your calendar so that they do actually happen. But we also just, don't want to overwhelm you feeling like you need to do everything at once.
So for an example, some of these things might be getting your tax materials to your accountant, rolling over an IRA, calling your utility companies to negotiate your bills, those kinds of things. And so as you list out all of these tasks make sure you set a [00:24:00] reminder in your calendar to check in on all of them and even better if you can, like, plug in, if you're this type of person where you're like, if it is on my calendar it will happen, go ahead and plug in the specific tasks you have to do when you know you'll have time to do it so that you're sure it gets done.
Yeah, one example I have right now is like to compare car insurance policies. It's not something I'm gonna do on like, a Tuesday night, but I'll make sure to get it done within a reasonable time frame.
Cassidy: Yeah, like, one of mine is to some place to roll over my solo 401(k). You know. I'm not going to do it today, but I do know it needs to get done.
Emily: Yeah.
Cassidy: Yeah, I know, you know, right at the start of this new year, I just took some time off for the holidays, and my first day back at work I was brain dumping this financial to-do list of like, everything I need to do tax-wise.
Emily: Mm hmm.
Cassidy: Just getting all of [00:25:00] that stuff out of my brain and on paper was so helpful.
Emily: Yeah, and it feels like a really good step when you have a long list of things to do. I was doing similar tasks the other day getting all of my tax stuff together, and like, the first thing I did was just, like, pull up the checklist of all the things I needed to gather and, like, just seeing that and, like, starting to go through it, like, I think I checked maybe one item off that list.
That was good for that day.
Cassidy: Feels so good!
Emily: Yeah, it feels good and it's, I know exactly what I need to do. It's right here written down. And I don't need to like, make myself crazy trying to get it all done in one sitting because that's just a recipe for frustration and negativity when it comes to your money.
Cassidy: That reminds me, did you pay your quarterly taxes yet? They’re due January 15th.
Emily: I did that [00:26:00] yesterday or yeah, I think it was yesterday.
Cassidy: I did mine today. Just a little note for anyone who is a 1099 employee, AKA, you work for yourself in some capacity, you need to pay quarterly estimated taxes. The deadline for your Q4 2024 payment is January 15th.
Emily: Yeah, and if you don't have, if, if you are one of those people and you don't already have them in your Google calendar, those due dates, that's like the best thing I've ever done for myself, is to put those reminders in and then, like a week before, you know, put an actual to-do on my calendar. So just another quick tip.
Cassidy: Yeah. So to wrap up this episode, as we mentioned at the beginning, there is a worksheet you can download in the show notes below if you want to go through these five steps yourself, of setting financial goals, of auditing your accounts. Knowing your big numbers, refreshing your spending plan, and also just getting your financial to-do list out of your head and onto [00:27:00] paper. We have a worksheet below that can help you do all of that.
Emily: Yeah. And I think another important thing is to like, as we mentioned, this isn't like you solve all your problems for the year and then you wait until next year to look at all these numbers again and your goals again, so, go ahead and put in some recurring dates in your calendar where you're checking in on these things.
Along with those, like, financial to-dos we already talked about. Like, maybe it's every month you set aside some time to check in with your partner if you manage money with someone else. And just kind of do like an expedited version of this exercise.
Cassidy: Yeah, I used to do a financial check in once a week where I would just, look at all the money I'd spent that week. And I would just go through a list of questions and the questions would be like, did I overspend in one budgeting category? Like, do I need to move money from somewhere else in my budget to cover that for the month so I don't go over budget [00:28:00] overall. And then it would be like, how do I feel about my spending this week? Like, is there anything I want to do differently next week? And it was just good to, and by spending, I also mean saving, right? It's like, if you have certain savings goals, it's like, did you, did you do everything that you wanted to that week, and if not, maybe something out of your control happened, or maybe something in your control happened, and you can just kind of take stock and examine that and then figure out how you want to go into the next week. And that's just a really good kind of habit to get into, and then it makes these end of the year check-in's a little easier because you've already built the habit of doing this. It's just instead of reflecting on the last week, or the last two weeks, or the last month, you're just reflecting on the year as a whole. So yeah.
Emily: That's a good point. Yeah, I think the most important thing is to not overwhelm yourself and to focus on taking a few small steps at a time and, like, celebrating your progress along the way.
Cassidy: Yeah, I think that is the overarching theme. It's like, just do it little by little in ways that feel good for [00:29:00] you, because really the point of earning money is to use it to build a life that you love. So, and I think these New Year's checklists are one way to help you, to help kind of guide you down that path.
Emily: Definitely.
That's a wrap on another episode of the Finance Girlies podcast. Nothing in this episode is meant to be taken as financial advice.
Cassidy: Please do your own research and talk to a professional if you need advice. As always, if you enjoyed this episode, don't forget to subscribe, rate, and review. Love you. Bye.
