As we enter a new year and decade, it’s an opportunity for a fresh start. Dusting up your finances is a great way to plan for change. Whatever you’re dreaming, you’ll probably need some financial organization to help get you there.
Here are ten steps to improve your financial fitness in 2020.
1. Clean Up Your Spending with a Budget
With most tasks, failing to plan creates lackluster results. If you’re constantly surprised by your high monthly bills and spending, taking one day a month for budgeting will make a big difference in your finances.
When it comes to sticking to your budget, try a free budgeting app that sends spending alerts and updates. The constant nudging will help you remember your long-term savings goals.
Here are some top budgeting apps to try:
Mint – All-in-one finance platform that tracks your budget, account balances and more
YNAB (You Need a Budget) – One of the best apps to teach you how to budget
Albert – Monitors your money and alerts you when you’re at risk of overspending
2. Pay Down Debt
If debt payments are a drag on your finances, make a debt payment plan to pay it off faster. Prioritize eliminating high-interest debt – like credit cards – first, since this drains your money faster.
With student loan payments or other personal loans, you can apply the same mindset. Focus on high-interest rate debt first, putting any extra money towards those loans, until they’re paid off. Don’t stop making regular payments to your other loans too!
3. Save Nest Egg
To get in your best financial shape, you should save a nest egg worth about 3 to 6 months of living expenses. Your nest egg protects you if unexpected costs arise, like a lost job or a medical emergency.
Keep your nest egg in a regular or high-yield savings account rather than an investment account for safety and liquidity.
4. Learn About Personal Finance
Getting financially fit requires strengthening your financial knowledge. Lucky for you, there are hundreds of free options to get you started on learning more about budgeting, saving, investing, and real estate. Listen to a podcast on your way to work, read or listen to a personal finance book, or learn about people’s personal experiences with money and overcoming debt through personal finance blogs.
Here are some of our favorites:
Podcasts
Rich Dad, Poor Dad (based on the popular book!)
Blogs & Websites
Want more? Here’s a list of 50 highly-rated personal finance blogs.
Books
5. Get Advice From Experts
Even the smartest money minds talk to experts about their money. As great as the free information out there is, it can’t replace talking to a real person with expertise in the field.
Meet regularly with your financial advisor to discuss your investments and with your mortgage advisor for guidance on your existing mortgage. Meeting regularly helps you determine if your current financial strategy and home loan still work for you and your future goals.
If you’re wondering if your current loan still works for you or thinking about a new one, give us a call.
6. Protect Your Credit Score
Your credit score is a big piece of your financial profile puzzle. Check it regularly, about once a month, using a free credit score service online or My FICO. Your bank may offer free credit score check-ups too.
To improve or protect your credit score, focus on paying bills on-time, using 30% or less of any credit lines, and avoiding or reducing credit card debt.
7. Automatically Save For Major Purchases
If one of your goals this year or decade is to save for a big purchase like a home down payment, make it easier with automatic deposits.
Set up a recurring deposit from your checking account into a linked savings account that you created specifically to save for your big purchase. That way, you don’t have to remember each pay period to deposit savings towards your future goal. And just as important, you won’t have to muster the willpower to park the money and not spend it.
There are some great apps to help you save; here are some of our favorites:
Acorns – Rounds up your credit card purchases and automatically invests it
Qapital – Set your own savings rules like purchase round-ups and automatic savings
Digit – Decodes how you spend so it can tell you how to save
8. Automatically Save For Retirement
Like saving for a future purchase, saving for retirement is made easier with automatic deposits. If you have a 401(k) through your employer, regularly allocate money from your paycheck to your retirement fund. If your employer matches your contributions, make sure you’re allocating the minimum to receive the match. It’s free money!
If you don’t have a retirement account through your employer, you can create an IRA through an investment brokerage firm and arrange automatic deposits from your checking account on a regular basis.
9. Organize and Secure Your Information
Securing your financial information might be one of the best ways to protect yourself and your money. Enable two-factor authorization on your bank and investment accounts, and turn on text alerts to notify you of any fraudulent credit card activity.
To get better organized, file away all your tax returns and other financial documents in a safe folder on your computer. Store your passwords to your financial accounts in a secure password manager.
10. Sign up for Spending Alerts
Credit card transaction text alerts are a great way to help you stick to your budget and stay organized. Most banks offer free texting services that will notify you every time you make a credit card purchase over a certain dollar amount, reminding you where your money is going.
The Bottom Line
By organizing your finances, you create freedom and opportunity to spend your money on the things that matter. With these tips, you can make this decade your best – and most financially fit – one yet.
