A new year is a great time to reflect on everything you’ve accomplished and to prepare for things to come. There is no better way to improve your life by setting financial goals for 2020.
Many people struggle with their personal finances, partly due to the uncertainty of politics and the economy. But those who have built good financial habits can usually weather anything life throws at them.
Building good financial habits is simply a matter of education and goal setting. Here are some financial goals for 2020 to help you start the decade off right.
Build a Habit to Save
The best way to start saving is to build a budgeting plan. Creating a budget will help you visualize your expenses and earnings before allocating money into savings. Use a budgeting app to get started, unless you are already savvy with spreadsheets.
A good budgeting strategy is the 50/30/20 rule. It suggests that individuals should allocate 50% of income to necessities such as housing, utilities, and food; 30% can be set aside for non-essentials such as entertainment and vacations; 20% should go into savings.
Savings goals motivate you to keep setting money aside. Whether it’s for a vacation, a new car, or an emergency fund, having money set aside in a savings account is an essential financial tactic.
While saving money, it’s always a good idea to have a good chunk of that money set aside for emergencies only. Life is unpredictable, so prioritize an emergency fund alongside your general savings goals.
Read Finance Books
They say knowledge is power, so it’s an excellent goal to leverage this sentiment by reading personal finance books. Creating financial habits is more easily done when you know what the consequences of doing or not doing so entail. Books are repositories for advice that you really cannot get anywhere else. It’s like having a one-to-one conversation with a financial expert that you can revisit at any time.
Start Investing
Investing can seem like a daunting task, but nowadays, it’s easier than ever to get started. There are several ways one could go about investing, from crypto to metals and real estate. Assess your risk tolerance, decide how much capital you have to invest, and then figure out which asset or investing style fits your personality best.
You don’t even need to invest your money yourself. Hiring a financial advisor to manage your investment portfolio is a great hands-off approach to letting your money grow.
Find a Side-Hustle
As the cost of living constantly increases all over the world, it’s becoming common for people to pursue side jobs — or hustles — to supplement their base income.
Thanks to the proliferation of innovative app services, just about anyone can take part in the gig economy to earn quick money. Ridesharing and food delivery services seem to have the lowest barriers to entry.
Likewise, it’s now easier than ever to turn your hobbies into paying jobs. Freelance job boards found online are continually looking for writers, designers, software engineers, and more to handle long and short-term tasks.
Even if it’s to pay a few bills, finding a side-hustle is still a worthy financial goal for 2020.
Pay Off Debt
Debt is the ultimate financial killer, yet statistics show that the majority of people in the U.S. are living in some degree of debt. Fortunately, it’s possible to alleviate and eventually pay off your debt.
There are a few tried-and-true techniques that financial experts have been teaching the public for decades. One such technique for paying off debt is to use the Snowball Method. This is a strategy that involves focusing the majority of your funds on a single account while paying the minimum payment on others.
Paying off debt should be one of the highest priorities of your 2020 goals. Real financial security and freedom will never be obtained with debt steadily siphoning money from you in the form of interest fees.
The Takeaway
These are just a few of the many goals one could adopt to help build healthy financial habits going into 2020. Read books on building habits and improving personal finances to gain an edge over the things everyone else struggles to do. Pursue a side-hustle to help pay off debt and save money. Use the money you’ve saved to start investing to gain a passive income. Set at least one of the goals mentioned above, and the rest will come easier.