As 2019 comes to an end, it’s time to start thinking about your goals for 2020. Some of your goals might include weight loss, a promotion at work, or finishing your degree. Those are all great goals to work towards, but don’t forget about financial goals too! You can start with these 6 financial goals for 2020 to help you build your wealth and avoid consumer debt.
1. Pay off debt.
Getting rid of debt should be one of your top financial goals for 2020. If you’ve accumulated more credit card debt than you’d like to admit in the past year or so, make a plan to pay it off. There are two popular methods for paying off debt: the Debt Avalanche Method and the Debt Snowball Method. Either one of these methods is a great option for paying off debt on your own. However, if you find you need outside help, such as a debt management program, you should look into a nonprofit credit counseling company, such as ACCC.
2. Build up an emergency fund.
By now you may have heard the statistic that 40% of American adults cannot afford a $400 emergency expense. Ideally, you should have 3-6 months’ worth of expenses in an emergency fund. Make it your goal next year to start working towards that amount if you haven’t already. Your emergency fund should be in a separate savings account that you do not touch unless it is truly an emergency, such as unexpected medical bills, urgent home/car repairs, or a family emergency. (No, that expensive pair of shoes you want is not an emergency!)
3. Contribute more money to your retirement plan.
Hopefully, you’ve been saving for retirement in an IRA or a 401(k) if your employer offers it. Could you be saving more? Check your budget to see if there are places you could cut back so you can add more to your retirement accounts. Many people find that when they reach retirement, they do not have nearly enough saved. Save now so you don’t have to worry later!
4. Start saving for other goals.
You probably have other major purchases you would like to make a few years down the road. Maybe you want to save for a down payment on a house, a new car, or you want to start saving for your child’s college education. Be sure to keep this savings account separate from your emergency fund.
5. Increase your credit score.
A good credit score is important if you plan on taking out a loan, applying for a new credit card, or even moving to a new apartment. A “good” credit score is usually around 750 or higher. If your credit score isn’t as high as you want it to be, don’t panic. It takes time to build a good score from scratch or to recover from previous bad financial decisions that decreased your score. To improve your credit score, keep your utilization under 30%, pay your bills on time, and don’t open up any new credit cards that you don’t need.
6. Be more cognizant of your spending.
Make it one of your financial goals for 2020 to be more aware of what you’re spending your money on. It’s so easy to just swipe a card without thinking, but try to be more careful about your spending. Look for coupons and discounts to save money wherever possible. A little bit of saving goes a long way!
For help with debt management, call one of ACCC’s certified credit counselors at 800-769-3571.