2020 is right around the corner and that means it’s the perfect time to get your financial goals in order. So, where do you start? What’s the first thing you should do to help make 2020 your best financial year yet? Well, we have five resolutions you may want to consider. However, before we get into those, there’s one important word to keep in mind: Specificity.
The definition of specificity includes these words: explicit, precise, definite.
How does this relate to your personal finance resolutions? Simple: it’s extremely important to be precise and definite about your resolutions.
For example, notice the difference between these statements: “I’m going to save money this year” and “I’m going to save $5,000 by December 31st”. Or, “I’ll definitely have a budget in place for 2020” versus “I’m going to have a budget plan ready for January 1, 2020”.
You’ll notice one of the statements is general while the other is specific and precise. One of the best ways to keep your resolutions is to be specific and make SMART goals (Specific, Measurable, Achievable, Relevant, and Time-based).
With specificity in mind, let’s get to the top 5 personal finance resolutions for 2020.
- Do one frugal thing every single day no matter how small that might be. Over time, you’ll see how being economical, in both large and small ways, can change your finances. If you’re unsure how to live frugally, here are some great simple frugal living tips provided by lifeandabudget.com. Give some of these tips and try and watch your savings add up.
- Check-in with your money at least twice a week. Many people check their money situation once a month (some not at all). It typically occurs around bill paying time – the most stressful time of the month. By checking in with your money 2 to 4 times a week, you’ll become more conscious of your spending and know how much you’ll have to pay your bills (and save!). It shouldn’t take more than 5 minutes each time. 20 minutes of checking is a lot better than many hours of anxiety, isn’t it?
- Pay yourself first by setting up and automatic savings plan. If you have an employer, you can talk to HR about setting up a payroll deduction of the percentage you’d like to contribute to a retirement fund. You can even set up an automatic payment into a savings account so if you need the money for an emergency, it’ll be available. If you’re self-employed, you can set up a direct withdrawal from your bank that goes directly into an IRA or other retirement accounts. By making things automatic and paying yourself first, you can rest easier knowing there’s more money available than meets the eye.
- Create a budget that follows the rules of zero-based budgeting. This is a method of budgeting in which all expenses must be justified for each new month. So, if you budget every single dollar in every paycheck, you can be certain that every penny is accounted for. If you know where each dollar is going, it’ll be much easier to stick to your resolutions, like not overspending, paying off debt or saving for the future.
- Update your calendar every month so that you know what’s coming up. Are there bills coming due? Wedding gifts to buy? Birthday presents to budget for? If you know what’s coming up, you’ll be able to plan (and save) for these future activities. It’s always best to plan ahead than to be surprised and have to take money from savings or an emergency fund.
As you get ready for the new year, try to be specific about your financial goals and New Year’s resolutions. It can help make 2020 less stressful and much more profitable – in more ways than one!
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