2020 Financial Vision: Organizing Your Finances for The New Year

Not all of us have perfect 20/20 vision but, with a little planning and work, we can all have a clear vision of our finances in 2020.

Set yourself up for a fiscally sound future by understanding your financial goals and how to achieve them. Although the new year has already begun, it’s not too late to lay out your financial plans and goals for the next 12 months. Sound like a strenuous task? Don’t worry—we have a few tips to help you set and stick to a plan.

1. Track your spending

   Start by gathering all your statements, receipts and withdrawals from the past few months. Organize essential spending by category—food, shelter, clothing, etc. Note how much you spend monthly for each. Don’t forget to include quarterly or annual expenses in your list, too.

    

   From there, add up your monthly income and deduct your expenses. The money left over is what you have available for paying off debt, savings, entertainment and other things. If you don’t have enough money left over, determine if there are areas where you can cut back or reduce expenses so that the amount coming in each month doesn’t exceed the amount going out.

    

   By gaining an understanding of how much you spend and where you spend it, you’ll be able to create a budget and set a strong foundation for your financial future.

    

2. Review monthly

   Once you've tracked your spending for a few months, set a monthly appointment with yourself to look over your statements. Ask yourself questions like, “Am I making progress on my financial goals?” “Do I need to adjust my budget?” and “Where can I cut unnecessary expenses?”

    

   If you're married or sharing the cost of living with someone, ask them to join you in this review. It doesn't have to be boring or stressful. Cook dinner, put on some happy music and make it a fun evening!

    

3. Anticipate the unexpected

   It's an unfortunate reality—life will throw a curveball at you when you least expect it. Sometimes it's a good curveball, sometimes it can be more challenging. Regardless, aim to have some cash set aside for the unexpected.

    

   Make it a goal to automatically transfer a certain amount to savings after every paycheck. Start with as little as $25 and increase it every few months—you'll be surprised at how quickly your rainy day fund will grow.

    

4. Use apps to make it easy

   In this day and age, people aren't budgeting the same way their parents did. Don't get us wrong, balancing the checkbook is a tried and true way to keep track of your money—but technology can help, too.

    

   There are countless financial apps to help you track your spending, pay bills, contribute to savings and more. You can even do it while you’re binging your favorite television show! Before you sign up, find out which financial apps work best with your financial institution.

    

5. Set up alerts

   You can also utilize your financial institution's email, text and app alerts to stay on top of your spending. Knowing when money comes in and out of your account can prevent costly overdraft fees.

    

6. Tackle your debt

   Most Americans carry some level of debt. In 2020, aim to tackle that debt so your money can go toward your wants and needs instead of interest charges.

    

   Reducing your debt is always a smart move. It will increase your credit score, decrease your overall expenses and help you move forward with your financial goals.

    

   There are several different methods of debt repayment. One popular option is the snowball method. Start by organizing your debts from smallest to largest. Put as much money as possible toward the smallest amount. Once that debt is paid, use that money toward the next largest amount. Keep this momentum going until all your debts are paid. Another option is to focus on the debts with the highest interest fees first so you can pay less in the long run. Whichever way you choose, keep it consistent.

    

7. Maximize your rewards

   When you pay your monthly balance in full, the best credit cards can help you earn valuable rewards. Your credit card purchases should help you earn points for cash back, a night out with your friends or travel discounts toward you next big vacation. You could also earn rewards points for discounted gift cards to your favorite stores. Speak with your preferred financial institution about their rewards program options.

    

8. Save for retirement

   You deserve to have a happy and financially secure retirement—no matter how far away that day may be. Now’s the time to figure out how much you have saved for retirement, how much you think you’ll need to live comfortably, and how you can increase your savings.

    

   Ask yourself these questions: Do you have a 401(k)? Does your employer offer a matching contribution? Do you have an IRA or Roth IRA? Are you maxing out your contributions every year? Evaluate your plan annually—your future self will thank you for it.

    

9. Consider investing

   Once you gotten to a point where your budget comfortably covers your monthly expenses, you can start to invest even more. In addition to retirement accounts, consider expanding your portfolio by investing in stock, bonds, mutual funds and more. Talk to a financial advisor to get started.

    

10. Budget for fun

    When all is said and done, you deserve to have some fun with your money.

     

    In the new year, set goals and celebrate accomplishments by putting some money aside for yourself. Decide on a set amount to help prevent impulse or wasteful purchases while still prioritizing self-care in 2020.

     

    If you'd like more personalized help, call Mountain America Credit Union today and speak to one of our experienced financial professionals.