The start of a new year is a great time to take stock of your financial situation, and perhaps find ways to improve on it. Some of that will mean actively doing more things right, but it also means avoiding the sorts of mistakes that can ruin your best efforts. Here are a few major financial blunders everyone should steer clear of in 2020.

1. Not having an emergency fund

You never know when your home's heating system might malfunction, your car's engine might fail, or you might land in the hospital with an expensive medical bill. But while the specific "unexpected" expense that will befall your household may not be predictable, what you can know for sure is that costly problems come along for everyone eventually. And if you don't have some money in the bank when they do, you'll likely have to rack up some debt to cover the bills.

That's why it's crucial to have an emergency savings fund -- money set aside for life's unknowns. Ideally, it should contain enough to cover three to six months of your essential living expenses, so if yours isn't close to that size, make boosting that cash reserve your first financial priority of the new year. Otherwise, you may wind up closing out 2020 with a pile of new debt -- and a mountain of stress.

Man sitting at table with binders, looking down and holding his head


2. Failing to follow a budget

If you don't have a clear and complete household budget, you'll have difficulty tracking your spending and understanding what your real expenses are. That's problematic when it comes to trying to save money, avoid debt, or plan for the future.

If you're not currently following a budget, carve out a few hours to set one up. Look through your bank and credit card statements from 2019 to see what your recurring expenses run you, on average, and then list them on a spreadsheet. Tallying them up may show you areas where you're spending more than you thought you were and have room to cut back.

Another important thing to do with your budget? Compare your total monthly spending to your monthly earnings. Your budget should be built around the goal of having some money left each month that you can route into your savings -- first emergency savings, and then your retirement fund. If that's not the case based on what your numbers look like today, then start making lifestyle changes that help you spend less.

3. Neglecting your retirement savings

If you don't contribute to a retirement savings plan like a 401(k) or IRA, you put yourself a serious risk of not having enough money to pay your bills during your golden years. Additionally, you'll miss out on huge opportunities for near-term tax savings that could help your finances now.

Whenever you contribute to a 401(k) or Traditional IRA, the money you put in is tax-free. Contribute $3,000, and that's $3,000 worth of your earnings that IRS won't get a piece of this year. If you fall into the 24% marginal tax bracket, that saves you $720 off the bat.

Furthermore, if you have access to a 401(k) plan through work, not saving though it could mean missing out on employer matching contributions, which means you are giving up free money. Though maxing out a 401(k) is difficult -- the limits are $19,500 this year if you're under 50 or $26,000 if you're 50 or older -- you should, at the very least, make an effort to contribute enough to snag your full company match. And if you don't have a 401(k), open an IRA and contribute some amount of money, even if you can't hit the $6,000 annual contribution limit ($7,000 if you're 50 or older).

4. Passing up the opportunity to fund an HSA

If you're on a high-deductible health insurance plan (meaning, one with an annual deductible of $1,400 or more for an individual, or $2,800 or more for a family), then it pays to route some money into a health savings account (HSA). If the company you work for doesn't offer one, you can open one independently.

HSAs let you set aside money that you can later withdraw to cover most medical expenses. Like traditional 401(k)s and IRAs, the money you contribute to an HSA goes in pre-tax. But because there's no date by which you have to use your HSA funds, the accounts offer a lot of flexibility. You can even go so far as to carry some of the funds into retirement, and you can invest the account balance too for added growth.

The annual HSA contribution limit for 2020 is $3,550 for individuals, or $7,100 for families. And if you're 55 or older, you can put in an additional $1,000.

Your financial goal in 2020 should be to close out the year in a stronger position than you started it in. Avoid these mistakes, and with any luck, that's precisely what will happen.