As we head into the last couple of months of 2019, it’s natural to reflect on the resolutions and goals set at the beginning of the year. Last year, a MassMutual survey found 28% of Americans said they planned to make financial resolutions for 2019. Of those resolutions, putting money into a savings account (35%), sticking to a budget (34%) and paying down credit card debt (24%) were among the most popular resolutions. However, such goals are usually dropped not long into the new year.
Don’t let the upcoming holiday shopping season derail your financial goals for next year, especially as retailers push sign-ups for store-branded credit cards in exchange for additional discounts on purchases. According to the National Retail Federation, consumers are expected to spend 3.8% to 4.2% more during this year’s holiday shopping than they did in 2018. This estimate is equivalent to consumers spending up to roughly $731 billion collectively over the last two months of the year. Carrying holiday debt into the new year can put you in a tougher financial position.
To stay on track and be financially successful in the coming year, it’s essential to start mapping your goals now so you can start off on the right foot and avoid quitting a few weeks into January. Before the holiday rush, take these few simple steps to set a clear financial plan and allow yourself to prosper in 2020.
Evaluate your current financial situation.
Start with where you are and where you want to go. Your credit score, debt load, account balances, assets and net worth are all important numbers to know when mapping out your starting line. Next, categorize those based on your top needs and priorities.
If you are in credit card debt or any other forms of unhealthy debt (especially those with high interest rates), paying down your debt in a responsible manner should be a priority. And if your savings account is not built out with at least three months of living expenses, consider making that a priority, too.
Pick your top two financial goals.
While planning early may put you in the mindset to conquer all your goals, consider focusing on and sticking to one or two goals. Financial goals tend to fall into one of the following four categories: debt pay-off, emergency savings, short-/medium-term investing and long-term/retirement investing. By homing in on just one or two goals, you’ll be able to better focus on taking the steps needed to attain success.
For example, if your goal is paying off credit card debt, planning now will allow you to find a variety of methods that will help you consolidate and get on track. Popular tactics include the “avalanche” and “snowball” payoff methods, as well as refinancing with a personal loan that often provides a lower interest rate now and ensures the debt is eliminated at the end of the upfront loan term. You could also take advantage of a 0% credit card balance transfer offer — but be careful. The average credit card interest rate is currently 21.1%. Ensure you’re confident you can pay it off before the 0% promotional period ends and the rate jumps back up.
Find the right motivation.
It’s one thing to pick one or two financial goals you want to conquer, and another to actually stick to them. Finding the right motivation will be key when you hit roadblocks. Whether it’s treating yourself to a small splurge or telling your community about your milestones, find a way to motivate yourself to keep on keeping on.
If you feel like you can’t pinpoint a source of motivation, try automating your goals. If you’re trying to grow your savings account or begin investing, automating a withdrawal each week or every other week will allow you to “set it and forget it.”
Financial planning can be overwhelming, but it doesn’t need to be. Taking small steps and getting an early start will help you conquer whatever financial goals you want to reach in 2020.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.