As the new year starts, time has come to set our financial goals and resolve to be better at managing our finances. Many of us tend to divide this resolution into three traditional aspects; spend less money, save more, and pay down debt.
While this may sound like a concise and straight-to-the-point list, those dreams get quashed even before the end of January, and it is for a good reason. Chances are you did not evaluate your current financial situation before setting the goals, and you only ended up straining your budget further.
So, what can you do in 2020 to ensure that you stay on top when it comes to managing your finances? Here are some quick tips to help you get started.
Set Precise Financial Goals
Setting clear and realistic financials should be your #1 target this year. Ask yourself what you want to achieve with your money and how you want to achieve it. Once you have precise answers to these questions, you will have a clear mental picture of where you are headed and how much you need to start saving every month to get there.
For instance, if your goal is to pay up an emergency loan that has been holding you back for some time, define that as a goal and even set a tentative date that you can work towards.
Make sure that you set both short-term and long-term goals, and keep track of them. Short-term goals are relatively easier to achieve and should always set you on the right path towards achieving your long-term goals.
Write your goals down and review them regularly to stay focused and confident of achieving them.
Try to Eliminate Debt
If you found it difficult to save money in 2019 as a result of carrying a huge debt burden, start with eliminating the debt first in 2020. If you took an emergency loanthat is eating into your budget, pause everything else and focus on clearing it.
Once you are free from paying the interest on the debt, channel the extra amount of money in your budget to your savings account. If you have multiple debts, consolidate them into a single debt and focus all your energy towards paying it off as soon as you can.
Create and Stick to a Budget
The truth is that a lot of people out there don’t have a budget because they don’t want to go through what they believe is a boring and tedious process of figuring out and listing their expenses, adding numbers, and making sure everything balances.
Unfortunately, budgeting is the only way that can help you know where your money is actually going. In fact, if you are bad with money, you have no other option but to start budgeting for your finances in 2020.
Sometimes, it only takes a simple budget to get your expenditure back on track and create room for saving more money.
Track Your Spending
Closely related to budgeting is the need to track your expenditure. Sometimes, the small purchases that you make here and there can add up quickly and eat a significant chunk of your earnings.
Start tracking your spending in 2020 to determine places where you may be unknowingly overspending. Develop a habit of saving all your receipts and even noting down your daily purchases in a spreadsheet or spending journal.
Categorize your purchases so that you can easily tell where you have a hard time keeping your spending in check.
Cancel All Subscriptions You Don’t Use
Services such as cable TV, online streaming, and gym membership can add up quickly. However, if you are not using them, then that is money wasted every month.
While throwing a few dollars here and there may not seem like a big deal, you will definitely feel the weight of that money if you sum up everything by the end of the year.
For instance, the standard Netflix subscription is $12.99/month. This means that if you don’t use this service frequently and you keep paying the subscription, you will have thrown away more than $150 by the end of the year.