Financial Resolution Ideas For 2020
Instead of just making resolutions about sticking to your diet, focus on your financial health! Here are some ideas for your 2020 financial new year’s resolutions.
Updated on Dec 30 2019
It’s time to make your resolutions for the new year. While most focus on their health and career goals, an important goal is financial health. Like any resolution, it’s easy to create big promises, but hard to follow through. Setting attainable goals with a clear strategy will help you achieve your financial resolutions for 2020 and overall retirement happiness.
Determine what is doable
Do you know what your objectives are? This is the first step when you’re making financial resolutions. What are your focuses? This could be setting up a budget, adding money to a savings account every month, paying off your credit cards, or maxing out your 401(k). Tools like Mint and You Need a Budget (YNAB) are helpful budget creators and will keep track of your monthly spend.
Paying down your debt is important, but make sure your goals aren’t too lofty. When aggressively paying down debts, do you account for any expendable spend? If you decide to put all of your extra money toward debt and not give yourself any wiggle room for personal fun expenses, it’s likely your planning will not be successful in the long term. Know what is doable without making yourself miserable.
Be honest with yourself
You know yourself better than anyone and that means that you know what you’ll be able to achieve and what may be out of reach.
“Review your financial progress over the last year. Are you particularly proud of one or two achievements? Do you wish you could go back and consider any decisions over again? Take a balanced look at your experiences and be frank with yourself about your financial situation and how you got here. Make sure your financial habits correspond to the rest of your lifestyle aspirations.”
MoneyTips.com gives a list of questions to ask yourself involving income, expenses, assets, debts, and insurance. Go through the questions and if you don’t know the answers, find them out. To have realistic goals, you need to understand the ins and outs of your entire financial history.
Prioritize those new year financial resolutions
Once you have determined achievable goals, the next step will be to prioritize them. Reaching all of your goals by the end of the year would be a great accomplishment; however, if you don’t get everything done, a prioritized list will ensure that you accomplish the most important goals. Here’s a prioritized checklist to help you get started.
1. Pay down high-interest debt, such as personal loans or credit cards.
High-interest debt must be your number one priority. While you may want to prioritize putting money into a retirement or savings account, creating a plan to pay off your debt as soon as possible should be your first focus. That doesn’t mean you can’t contribute to retirement accounts or emergency funds, it just means that an actionable plan to pay down debt is the most important priority for your overall financial health.
Consider consolidating your debt and asking for a lower APR to help you with this resolution.
2. Stack your emergency fund.
An emergency fund is money that will keep you afloat in major emergencies, such as job loss. It’s recommended to have at least six to nine months savings in case you are unable to work or find a new job. This is important to your well-being because unfortunate occurrences can happen at any time, and bills will still need to be paid.
3. Contribute to your retirement accounts.
Ask any retiree and most will say they wish they had saved more for retirement either by starting to save sooner or contributing more money. If your company offers a 401(k) match you should match what they offer—this is free money for your retirement fund. Speak with a financial planner to determine your best course of action.
4. Set up a budget.
While this is something that you should be thinking about while planning actionable items like emergency funds and paying down debt, creating a budget will help to ensure that all of your spend is accounted for. Before you even start with a budget, track every dollar you spend for a month or two. This will give you a general idea of what and how much you spend throughout the year. Once you know your average monthly spend, you can create a budget for bills and other expenditures.
Use our End of Year Financial Planning Checklist to familiarize yourself with the important must-do’s. That will make it easier to determine your financial resolutions and goals for 2020. A trusted financial advisor will be able to help you throughout this process.
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