Money

3 ways to get your finances in order before the end of the year

Shoppers line up to pay for their merchandise at a checkout counter in a Target store.
Scott Olson | Getty Images
Shoppers line up to pay for their merchandise at a checkout counter in a Target store.

For many, the holiday season marks a time of festivities, gift exchanges and time off from work. But as one year comes to an end and the next approaches, this is also a great time to get your finances in order.

That's according to Sallie Krawcheck, co-founder and CEO of Ellevest and former Wall Street executive at major institutions including Morgan Stanley, Merrill Lynch and Citigroup.

"It's a time of planning for going forward," Krawcheck tells CNBC Make It. "We see a lot of people, often over the Christmas holiday, but certainly early in the new year, taking stock of where they are on their personal finances and investments."

Here are three things Krawcheck says you should do to be financially successful as you prepare for 2018.

Talk to your boss

If you recently went through your year-end performance review or you are preparing for one, you may feel like you aren't allowed to take a deep breath and relax. Anxiety won't help you, though. Clear information will.

"You want to make sure, either in that performance review or early in the next year, to spend time with your boss discussing what success looks like in 2018," Krawcheck says.

Some questions Krawcheck recommends that you ask your boss include, "What are the metrics that we are measuring my success on?" "What are the target revenues we want to reach?" "What are the new product initiatives?" and "Who are the new clients we are working with?"

By asking these questions, you will get a clearer picture of what is important to your department's success and that of the company overall.

"You want to make sure, that if at all possible, you are working on things that are important to the department, not the tangential unimportant stuff," Krawcheck says. "The more you can get yourself on projects that are important to the company and kick ass over the next year, the better positions you will have for it."

Avoid racking up credit-card debt

As much fun as the holidays are, they are also notoriously a time of excess.

"We go overboard in every way. We eat too much, we spent too much, we buy the beautiful dress for the party in case we see our ex," Krawcheck says. "But so many gifts end up re-gifted anyway." And, as a result, an alarming number of shoppers are still paying off their debt from last Christmas.

Krawcheck shares a tradition she has with her family: Instead of allowing gift-giving to become an arms race as grown-ups try to out-give each other, they set limits and only buy presents for their own parents and the kids.

You don't have to spend a fortune on those, either. "Try not to run up credit card debt over the holidays because it's outrageously expensive," Krawcheck says. "Homemade gifts are amazing! What's wrong with that or making some cookies?"

If you have already spent or charged the money, though, you can still get back to black, she says. "Focus early in the new year on getting it paid back, getting your emergency funds straight and then get back to investing."

Set some new rules

Come January 1, you are likely to hear many people say, "New year, new me."

Krawcheck points out the top two priorities most people commit themselves to for the new year: "I'm going to go to the gym and get myself financially straight."

"But we all need to do a better job of getting financially straight than we do with signing up for the gym," Krawcheck says.

One suggestion she offers to help people get their finances in order, especially for those who are new to their profession, is the 50/30/20 rule: Dedicate 50 percent of your check to your personal needs, 30 percent to having fun and 20 percent to your future.

"If you can't hit that goal right away, that's okay," Krawcheck says. "Invest even 1-3 percent of your take-home pay, but get yourself in that habit of investing."

Although it's easy to set up these goals during the excitement of planning for the new year, a good way to make sure you stay on track is to automate your finances as much as possible.

"Get a certain percent of that paycheck taken out automatically, automate an amount into your 401(k) plan," Krawcheck says. "It's the old 'pay yourself first' trick. You won't have to remind yourself every two weeks to put another $500, $100, $50, $5 or whatever it is into an investing account."

"The more you can automate these things," she says, "the better off you are."

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