- Set clear savings goals
Start by setting a tangible goal you can reach in 2020.
That can include adding one month’s pay to your emergency fund. Ideally, your emergency fund should eventually grow to have six months’ or one year’s worth of living expenses saved.
You can schedule money to be directly deposited into a high-yield online savings account. Those accounts provide around 2% annual percentage yields, compared to about 0.2% at traditional brick and mortar banks.
Your goal could also be to boost how much you contribute to your retirement savings in your 401(k) plan or individual retirement account.
In 2020, you can put away as much as $19,500 in a 401(k), or $26,000 if you’re age 50 or over. For IRAs, you can save up to $6,000, or $7,000 if you’re 50 and up. And thanks to new legislation, you can continue to contribute to your IRA accounts no matter your age, as long as you have earned income.
The key is to identify a specific step, and then keep going.
2. Have a debt payoff strategy
Also try breaking down your goals to knock off debts into smaller, meaningful steps.
For example, you may strive to pay off 20% of your credit card debts.
Because the average credit card balances are roughly $8,700 per household, the idea would be to pay off $1,740 toward that debt. That would cost $145 per month, provided you transfer your balance to a 0% interest credit card.
A 0% interest credit card can allow you to combine your credit card balances by using a balance transfer. You will need to have good credit to qualify.
Next, identify a strategy for paying down those debts. You may want to start with small balances first to get momentum. Or, you could start with the debts with the highest interest rates first to help reduce the total you ultimately pay.
3. Identify ways to spend less
One surefire way to reach your financial goals faster is to spend less.
But to do that you need to have a plan. Just 42% of adults have a budget, according to the National Foundation for Credit Counseling.
Even if you do have a budget, it’s always wise to update your plan and look for more ways to cut corners.
Start by gathering all of your bills from the last three months.
Then, make a list of recurring expenses and rank them in order of importance. Put your necessities — housing, food and health care — at the top of the list.
Source: Int’l agency (cnba)