5 Financial Resolutions to Make for 2020
The New Year has arrived! Have you made your resolution for 2020? If you’ve been struggling financially or want to get a better handle on your money, perhaps you should resolve to improve your finances. Research shows the more specific your goals, the more likely you are to achieve them. “Handling money better” is non-specific.
Here are five specific financial resolutions you can make for 2020:
1. Save For an Emergency
This is one of the smartest financial goals you can set. When you have an emergency fund, surprise expenses don’t hurt nearly as much. (And you won’t have to charge them to a credit card.)
Most experts recommend putting 3-6 times your monthly expenses in an emergency fund. This seems like a lot, but you can build toward this goal slowly. Arrange to have the largest amount you can afford from every paycheck direct-deposited into a separate savings account. The savings will grow, and you could have a pretty substantial emergency fund by the time 2020 is over, especially if you worked harder to lower discretionary spending.
2. Review Your Budget Monthly
One reason people struggle to stick to a budget is they fail to review and amend their budget every month. So this year, one of your financial goals should be to sit down — with your partner, if relevant — and review your budget every month. Look where you spent the money last month, and identify areas you can improve in the coming months. This continual review process makes it easier to continually improve your budgeting tactics.
3. Pay Off Credit Cards
Some credit cards have scary-high interest rates of 20% or more. Even “good” cards may charge as much as 14%. Paying off your credit card debt will save you a fortune on interest.
To determine the amount you can put toward paying off credit debt, review your budget. Identify three things you can eliminate each month. Maybe you could spend $50 less per month on groceries, save another $50 by canceling or lowering your cable subscription, and save as much as $100/month by eating fewer restaurant meals (including delivery). That’s an extra $200 each month to use to pay off your credit card debt!
4. Avoid Extra Grocery Store Trips
Resolve to make 2020 the year you buy groceries once a week — no matter what. Each time you run into the store for one ingredient, you waste money on extras you didn’t need.
This year, if you are missing an ingredient, substitute or make another dish. You can also postpone that recipe until next week’s grocery trip.
If you find yourself struggling with overspending at the grocery store, having groceries delivered is a good alternative. You may pay a small fee, but you can’t impulsively buy additional items.
5. Set Up Automatic Payments
If you don’t have automatic payments set up for recurring bills (mortgage/rent, electricity, insurance, etc.), set up those payments in 2020. Autopay will decrease your risk of accidentally making late payments which lower your credit score. Make sure you schedule your payments for a few days after your paycheck is typically deposited, in case your check is deposited late one month.
The great thing about these financial goals is that one or all of them will make a difference! Make 2020 a great year for finance by getting focused and working to keep your resolutions.