Could 2020 be the year you get your finances in order? Setting financial resolutions can be frustrating and overwhelming, especially since it involves making some really important decisions under extreme uncertainty. As many studies have shown, people find it difficult to commit to accomplishing goals.
According to research by the University of Scranton, 92 percent of people who set goals and fail to achieve them lack a planning strategy. Still, your failures in the past shouldn’t stop you from getting your hopes up and get ahead with improving your financial situation.
It’s nearly impossible to meet your financial goals without a solid plan in place. The only one preventing you from achieving your financial goals may be you. So get out of your way and set your goals through these simple steps and tips:
10 Financial Goals You Need to Set in 2020
1# Budget, Budget, Budget
The best way to gain control of and monitor your money is to create a budget, so you’ll know where your cash comes from and where it goes. You should have monthly and annual budgets to make this work effectively.
Put everything in writing, so that you can get a clear financial picture. Keep a record of your income and expenses to determine if you have enough money left at the end of the month.
Unless you know where you stand currently with your savings, assets, debt, and spending habits, you won’t be able to set achievable financial goals for 2020.
2# Start Small but SMART
You don’t need to get caught in extreme financial resolutions, such that you set yourself up for failure. It’s best to start with small but straightforward changes to your saving and spending habits. Rank each goal in terms of importance and urgency.
Goals can create a huge impact when they are SMART—specific, measurable, attainable, realistic, and time-based.
Simple and actionable goals may include cutting out a cup of your favorite coffee per week and allotting a specific amount per month for your savings account.
It’s also important to permit yourself to be flexible. There is power in having specific goals but not obsessing about them.
3# Track Your Spending
Embracing the concept of frugality helps you get ahead with achieving your goals. Pay close attention to your spending habits and watch out for unnecessary expenses.
Look for ways to slash your monthly expenses, which may include cable bills, magazine subscriptions, gym memberships, and parking.
Try to negotiate your bills, so that you may pay less in penalties or interest rates. Then shop around before making purchases to save money.
Automating your bill payments also helps you effectively avoid late payment fees. Taking note of the little things can make a big difference in your finances.
4# Manage Your Debt
Calculate your total debt and adjust your monthly payments accordingly, so that you can free yourself from any debt. It takes a lot of discipline, but strategizing the way you spend and earn will help you pay the debt off easily and quickly.
Try to list your debts by interest rates and prioritize paying off the ones with the highest interest rates.
After doing this, make sure to take concrete steps so you won’t get into debt again. Carefully consider each major financial decision, such as when to use your credit cards.
5# Pay Yourself First
Get into the habit of paying yourself first to improve your finances. At least 10% or more of your income should go into a savings account.
Automate and use online banking tools so you can efficiently distribute money into your savings.
This practice can help ensure that you achieve your goals as well as save for future expenses like a down payment for a home or funding your child’s education.
6# Build an Emergency Fund
A good goal is to build an emergency fund of three to six months’ worth of expenses. This technique will help protect your investment and retirement savings, and will give you enough to cover for the times you’ll be needing backup. Make sure that you’ll only use the money for emergencies like job loss, medical problems, and the like.
If you’ve exhausted all other options and you really need to dip into your emergency fund, ensure that you bring it back up to the full amount as quickly as possible. Always analyze your income and spending to find small amounts of money to set aside safely.
7# Save for Retirement
Invest in building your retirement map. List your priorities—family, home, career, or travel—and create a financial road map that leads to the future that you want.
Take advantage of your employer-sponsored retirement fund, if you have one. If not, set up your own retirement savings account.
The sooner you start saving, the more time your money has to grow due to the power of compound interest. Try to increase your contributions every year.
Don’t be afraid to get comfortable with investing because it increases your chances of becoming financially free.
You don’t need a big amount of cash to get started. You may start small, but be sure to put away money into your investment account regularly.
Diversity your investments, and use a wide range of tools like mutual funds, annuities, or real estate. Try to stick to safe investments that don’t get severely affected by the market going up and down.
9# Diversify Income Sources
Go the extra mile and look for creative ways to make extra cash. You can increase your income by earning more at your current day job, or by finding alternative ways to supplement your full-time salary. You can start with what you already have: check out your closet at home and sell any excesses you find.
In these times, you can have a myriad of options to earn extra income in your spare time, such as working from home.
By exploring work-from-home jobs, you can improve your ability to pay off debt, save, and achieve financial independence.
10# Stay Motivated
It can be difficult to remain on track when you’re saving for the long-term, but one key to successful financial planning is understanding what motivates you. Always go back to why you want to achieve your goals, so that you can push through setbacks. And this should go beyond just earning money.
Know and tap into what drives you, so that you can set goals that are tailored specifically for you. This way, you can increase your chances of success.
When you keep your “whys” in mind, nothing can stop you. Also, don’t hesitate to re-prioritize and re-evaluate your goals if you find that you need to switch your focus to something else.
Remember that setting and achieving your financial goals will always be a work in progress. Part of the process is keeping it simple—list your goals, break them into categories, and rank their priority. Focus on your financial plan, so that you can make the best choices.
As important as it is to review your progress regularly, it’s also very important not to obsess over your goals. Find that balance between achieving your goals for the future and living for today.
Author Bio: Isabel has a passion for writing about lifestyle and shopping. She enjoys meeting new people and hearing different stories.