It's not all just resolutions and fireworks at the end of December. With 2020 right around the corner, your wallet will thank you for doing a little end-of-2019 prep for the new year.
Take a minute (or two) to look back at 2019 and how your finances did. What goals did you achieve? Any big purchases? What was your income, and how much did you save? Did you acquire or reduce any debt? Approach it with no judgments, just objectivity. This is a great way to figure out what you're proud of, and what you'd like to do differently in the coming year.
Based on 2019, how much do you expect to earn in 2020? Get a handle on that first, so you know what you're working with. Is there any way to make bring in more money? Any raises or bonuses to take into account?
In order to know how you need to budget, you need to know how much you're spending. Figure out what your significant, fixed expenses are each month: rent, mortgage, energy, car payments, internet, that kind of thing. Add everything up, and then look at your big spending categories, like groceries, dining out, entertainment, savings, and set a plan for what you would like to be spending. See how that fits with what your income is and what's left after your more significant monthly expenses.
You might want to track your spending for a month or two to get a sense for what you spend or look back over bank and credit card statements, so you know what is typical. Then reevaluate for the new year. Is there any spending you could cut out or reduce to save some here or there? But remember that you want to be realistic with your budget if you would like to stick to it. There's no point in setting an extra tight budget if you only blow it every month. Know yourself and your spending habits, and then go from there.
Plan for Emergencies and Larger Purchases
Once you've looked at your expected expenses and income, it's time to plan for bigger goals. Do you have big plans or purchases for 2020? Maybe you're thinking about buying a car or a house, taking a trip, or anything else under the sun. This is the time to start prepping and planning, figuring out how much you need to save in advance, and working out a strategy to achieve your goals.
But before you start saving for a big purchase, make sure you're in the right place in case of emergencies. Do you have a rainy day fund with at least a few months of expenses saved, just in case? It's better to be prepared and not need it than to need it and not have it.
When you're approaching this type of financial planning, layout baby steps for yourself, and make sure to build in rewards when you meet milestones. If part of your savings plan involves cutting out fancy coffee drinks, maybe your first reward can be to purchase one as a special treat. With a plan in place and achievable steps along the way, you'd be surprised at what you can achieve.
Once your prep for 2020 is in place, set up a system of monthly review to look over what you've accomplished and what you might need to tweak in your budget to set you up for success. Once the hustle and busy times hit in the year, you'll be surprised how easy it is to place a priority on other things, rather than to take a moment to sit down and look at your finances.
If you find a system that works for you—whether it means looking through your statements over your coffee on Saturday morning, or checking in each time you get a paycheck—and set your intention to stick to it, you're well down the road to financial success in 2020.
For more help meeting your financial goals in 2020, open a personal savings account with RMCU. Find out more here.
If you enjoyed this blog, you might enjoy these other related blogs:
- So You Want to Take Your Kids to Disney World: How Much to Save and How to Do It
- Budgeting Your Money Doesn't Have to Stink! Try These Ideas to Make Budgeting Easier
- Creative Ways to Save for College
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