7 money moves to make now to start the new year strong

If you're like many Americans, the end of 2020 can't come fast enough.

Yet before you ring in the New Year and hope for better times ahead, there are moves you should make first to set yourself up for financial success.

"Use December to reflect on 2020 and plan your goals on the key things that are important to you mentally, physically, emotionally and financially," said certified financial planner Zaneilia Harris, president of Harris and Harris Wealth Management in the Washington, D.C. metro area.

The coronavirus pandemic and resulting economic downturn have taken its toll, whether it is families who have lost a loved one, parents trying to navigate virtual education and lack of child care, or those who have lost a job and are struggling financially.

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While there was some relief from the federal CARES Act, those benefits have either expired or are set to run out by year's end — unless there is new legislation. On Tuesday, lawmakers unveiled a $900 billion plan which was quickly rejected by Senate Majority Leader Mitch McConnell.

Meanwhile, pharma companies are rushing to bring a Covid-19 vaccine to market. If approved by the Food and Drug Administration, the first doses could possibly be distributed before the end of the year.

With that in mind, here are steps you can take to get a handle on your financial life and prepare for the new year ahead.

1. Focus on your health

Staying physically and mentally healthy is the most important thing you can do right now, Harris said.

If you are stressed or anxious, you certainly aren't alone. During late June, 40% of U.S. adults said they were struggling with mental health or substance use, according to the Centers for Disease Control.

Perhaps download a meditation app to try to de-stress and see a mental health provider if you feel the need, Harris suggested.

Taking care of yourself will also have a positive effect on your finances.

"Some people can create negative habits when they are not in a good space physically and mentally," she said.

When you are feeling good, you are less inclined to buy unnecessary items. It will also help you focus on your future.

2. Review your financial goals

Make sure you are on track with your retirement savings and make tweaks to your portfolio, if necessary. If you have a financial advisor, make an appointment to talk by telephone before the end of the year to make sure you are heading in the right direction, Harris said.

For those who took money out of a 401(k) this year, which was permitted through the CARES Act penalty-free, try to come up with a game plan to try to get back on track once you are bringing in income.

There are other, short-term goals you may have in mind. It may be a vacation or it could be moving from an urban to suburban or country environment, or to a less expensive home.

Whatever the objective, make sure you have a plan around it, Harris said.

3. Check your taxes

Unemployment benefits are considered taxable income. If you haven't set money aside, try to start. Come April, you'll owe federal tax and state tax, unless your state doesn't impose an income tax.

If you received a forgivable Paycheck Protection Program loan as a small-business owner, you are exempt from federal taxes, but you may be subject to state tax, according to the Small Business Administration. Also, bear in mind that you won't be able to claim tax deductions for the expenses covered by the forgiven loan.

"Speak with your tax advisor and make sure that there isn't something you should be doing at the end of the year to mitigate your tax position," said Ivory Johnson, a CFP and founder of Washington, D.C.-based Delancey Wealth Management.

As the year comes to a close, you should also make sure you are doing everything you can to save on taxes.

Take a look at your investments and what losses and gains you have for the year from any sales, said Johnson, a member of the CNBC Financial Advisor Council.

If you have made more money that you've lost, you may consider shedding an asset that isn't doing so well. It's called tax-loss harvesting. By selling assets at a loss, it will make up for some of the gains you made and should reduce the amount of taxes you will have to pay.

Also, spend the money in your flexible spending accounts, since the funds generally expire at the end of the year. The distributions are tax-free as long as they're used toward a qualified medical expense or dependent care costs, depending on the account.

4. Shore up cash reserves

The pandemic has certainly highlighted the need for an emergency fund.

"You don't know what the future is going to hold," Harris said.

"You want to make sure you have enough to sustain you in case the unexpected happens."

If you have the means, now's the time to have a renewed sense of purpose in making sure you have savings set aside, Johnson added.

At the minimum, aim for three months' worth of expenses; if you can, go to six. Cut back unnecessary spending and divert that money into savings.

"We are seeing what happens when people don't heed that advice," he said.

"There are people who don't know they are going to stay in their house because they don't have an emergency fund."

5. Max out your 401(k)

If you didn't put the maximum amount allowed by federal law into your 401(k), 403(b) or thrift savings plan, now is the time to add more, if you can.

The contribution limit for 2020 is $19,500. Those ages 50 and older also have an additional $6,500 catch-up contribution.

Meanwhile, if you have a traditional or Roth individual retirement account, you can put aside $6,000, plus an extra $1,000 if you are 50 or older.

6. Ask for help

If you are going to be impacted by the loss of aid come the new year, ask for help.

If you rent, go to your landlord and try to negotiate, said Johnson, who is a landlord. Do it before you start to fall really behind.

"I am much more likely to negotiate because the alternative is getting someone evicted, repainting the place and hoping I can find somebody else," he said.

If you think you will need money, you may consider tapping into your 401(k), Johnson added. The deadline to do so is Dec. 31.

The other option is turning to family. That may mean moving in with other members to save money.

"Think about what it is you need to do to survive," he said.

7. Look for opportunities

If you still have a job, you are fortunate. Yet if you are unhappy or unfulfilled, this may be a good time to see if your job aligns with what you want to do going forward, Harris said.

"A lot of my clients have used this opportunity to seek out positions that fulfill them instead of just having a job," she said.

Just make sure that you are asking for what you feel you are worth, she said. That isn't just income, but other avenues of compensation such as additional time off.

In the end, remember to be honest with yourself and others about where you are financially.

"Money is emotional," Johnson said. "People shut down when stuff like this happens.

"Get over it and say 'This is where I'm at,'" he added. "But don't beat yourself up.

"It's a global pandemic."

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