Just as “lose 10lbs by visiting the gym twice per week” is a better goal than “get fit,” setting specific, measurable goals for your finances is an important step in achieving them. If you’re unsure of what to focus on beyond spend-less-save-more, let these 5 money-saving tips guide your resolutions to make 2020 a financial game changer.
1. Improve your financial literacy
One of the best investments you can make is in your financial education. Learning more about any facet of money management, whether that’s budgeting, investing, or paying off debt, will pay dividends for the rest of your life. Depending on where you are in your financial journey, this might mean picking up a general personal finance book like Stop Overthinking Your Money by Preet Banerjee, or something more advanced and specific, like Benjamin Graham’s tome, The Intelligent Investor.
“Read more books” is a common New Year’s Resolution, so making one or two of those #finlit will let you knock off two resolutions in one!
2. Consolidate your debt
Carrying multiple balances, especially at varying interest rates, can feel like death by a thousand paper cuts when your bills come in the mail. If one of your goals is to get your debt under control in 2020, consolidating that debt might be the answer.
Debt consolidation means moving all or much of your debt to one place, so that you can experience the joys of having only one interest rate, one minimum payment, and one repayment term. You can do this by taking out a line of credit, debt consolidation loan, or credit card and using it to pay off all your existing balances.
Not only will credit consolidation alleviate the headache of managing a number of different payments, it can also reduce the carrying cost of your debt and even get you out of debt faster. If some or all of the debt you’re carrying is high-interest credit card debt, you’ll likely be able to reduce the interest you’re paying each month by moving this debt to a low-interest line of credit or personal loan.
3. Start saving for a big goal
If you really want to start the New Year off right, take your first steps to accomplishing something big with your money. This can be anything from saving up a down-payment for your first home or finally starting a retirement savings account. Whatever your goal, make sure you know exactly what you’re saving for and the specific dollar amount you need.
Once you know your money wish and its price tag, it’s time to make a savings plan. If you want to hit your target by the end of 2020, all you need to do is divide the amount you need to save by 12, and that will tell you how much you need to set aside each month. For example, this might be the year you finally make good on your promise to yourself to have an emergency fund. If you want to have $2,000 saved by the end of the year, you’ll need to set aside $167 per month to accomplish this goal.
Once you know what you’re saving for and how much you’ll need, open a dedicated savings account and start saving right away. Bonus points if you open the account with a financial institution other than your primary bank, so you don’t see the cash and are tempted to spend it every time you log in to your online banking. To give your goal an extra boost, don’t wait until your first paycheque in January to start saving. Even if you only have $10 to spare right now, deposit it in your new savings account to give your goal some momentum!
4. Earn an extra $1,000
The easiest way to supercharge any financial New Year’s resolution is to increase the amount of money coming in to your bank account. Set a goal to earn at least $1,000 extra in 2020, and start thinking of creative ways to drum up the cash. Whether you sell old items you don’t need, negotiate your salary, or pick up some extra work outside your regular job hours, you’ll probably find you’ll actually be able to earn $3,000 or $5,000 or even more next year.
You can direct that extra income toward debt repayment, savings, or even next year’s holiday shopping list.
5. Take care of any much-needed financial housekeeping
Paying off debt, saving for the future, and increasing your income are all important financial tasks, but all your progress can easily be wiped out if you leave yourself vulnerable to financial catastrophe. If you’ve been neglecting the less glamorous and gratifying tasks of good money management, the New Year is a great time to ensure you’re organized going forward:
- Get your credit report and ensure all the information is correct and up to date
- Review your insurance coverage, and make sure you have the often-neglected but always-needed coverage, like disability insurance
- Rid yourself of subscription creep
- Find discounts by bundling services
- Switch all your bills to online bill pay
Every day is a chance to start fresh with your finances, but there’s something about the New Year that can inspire that extra boost to get your bank account in order. There’s never been a better time to remedy old mistakes and reach new money milestones, so when you sit down to make your 2020 resolutions, make sure to include a few that will put more money in your pockets – now, and for many years to come!