MoneyDo: Set Financial Goals For 2020.
Now that the holidays have passed, including the expenses of the holidays, it’s a great time to look at setting some financial goals for 2020. You may have set some fitness goals or health goals, but setting financial goals for the year is an important part of your resolutions.
Financial goals can range from debt reduction to maximizing retirement savings, and are a great way to establish where you are, and where you’d like to go. Make sure you note what your goals are and set up simple accountability – perhaps a notepad with your progress, or a word document – throughout the year to evaluate your progress.
- In light of changes in your income or tax laws, review how much you’re contributing to your retirement accounts.
- How much do you contribute to your retirement accounts annually? It’s a good time to review how much you contribute. A good rule of thumb is to continue at least 10-15% of your pre-tax income. The earlier you start the more time you have for growth in your accounts.
- Monitor Your Credit Score/Report
- Do you know what your credit score is or what claims there may be on your report? Although we are in a new year, it is still unknown what all the ramifications will be of the Equifax hack. It’s a good time to see what is impacting your credit score, such as high debt balances, and set a time every quarter to review.
- Track Your Expenses
- Keep track of your expenses for three or more months so you can establish a baseline of what you typically spend.
- If you know how much you spend on a monthly basis, you’ll be far better equipped to perform two other essential financial goals:
- Establish or add to your Emergency fund.
- If you’re still working, do you know if you have enough saved for a rainy day? It’s important to have an emergency fund, which should have three to six months’ worth of living expenses. Set a goal to start funding or increase the balance of your emergency fund.
- Create and stick to a budget
- Now that you have a better understanding of what you spend, setting up a budget – or improving your existing one – will include realistic information. Make sure you analyze your budget monthly to know if you’re meeting those goals.
- Manage your debt
- Do you know what interest rate you are paying on your debt? Now would be the time to set a goal to pay off those high interest credit cards or debt on assets that depreciate in value, such as a car.
- Consolidate Assets
- Do you have retirement or investment accounts at many different institutions making it hard to track? Look into consolidating those accounts to one institution in 2018. Consolidating will allow you to better monitor and evaluate the accounts.