The start of a new year is a fantastic time to review, understand, reset, and improve your financial situation! A new decade may be an even better time! With year-end financial statements available, and goal-setters abounding.. why not go ahead and make some financial New Years Resolutions going into 2020?
Just like other New Years Resolutions, these financial resolutions can help improve your (financial) “fitness,” habits, consistency, growth, and more! … but only if you stick to them.
So in planning your financial New Years Resolutions – make sure that you’re setting SMART Goals that you can not only aspire to.. but actually STICK TO and achieve!
It seems that there’s little worse for goal setting than an impossible goal – it only sets you up for failure, and then sends you spiraling down then “well I already ruined it” path.
Instead, set achievable goals WITH AN ACTION PLAN TO ACHIEVE THEM!
Here are some good Financial Resolutions to help you gain financial stability, financial freedom, and maybe even wealth!
Financial New Years Resolutions for 2020
- Calculate your total debt (if you have any)
This isn’t very fun, but it is an eye opening financial resolution.
Calculating your total debts will give you a big picture sense of what’s going on with your money. This will allow you to make plans and create a budget that is appropriate for how much you need and want to pay off.
- Make a specific plan to pay off debts.
The financial New Years Resolution “pay off debts” is easy to say – but how will you do it? Sit down with a calculator, and an interest calculator to figure out first how much you owe, and how much you will need to pay each month to pay off your debts.
- Review your credit report. (use a free tool that doesn’t “pull” your credit like CREDIT KARMA)
While credit scores aren’t the biggest deal in the world, they do significantly affect your ability to do things like rent or purchase property and cars, or to obtain credit cards, loans, and more.
Make sure you use Credit Karma, which should check your credit scores for FREE, and NOT perform a hard pull on your credit. Plus, it will continue to update you monthly with your scores throughout the year!
- Save up an emergency fund.
One of the most important things you can resolve to do with your finances in 2020 is to save up money for an emergency fund.
An emergency fund should consist of approximately 3 months’ worth of expenses (or more!): rent or mortgage, utilities, insurance, car payments, and any other payments you make on a regular basis.
Emergency funds are for those freak emergency situations that you don’t expect, that can keep you from working and making money. Heaven forbid you get into a terrible accident and can’t work for 3 months – well, your emergency fund has got you covered! This also works for illness or death in the family – if you are forced to leave work to care for someone, or even for layoffs and loss of job.
You just never know what life will throw at you. So it would be prudent to set a financial New Years Resolution of creating an emergency fund!
- Calculate your net worth
Figuring out your net worth will not necessarily change anything you’re doing – either on a daily basis, or truthfully in your bigger purchases and sales either. It simply gives you a good idea of where you stand financially.
So, what is a person’s net worth?
According to Nerdwallet, “Net worth is the total value of a person’s assets minus the total value of his or her liabilities.” Use their Net Worth Calculator here to figure out yours!
- Save up for a fantastic vacation.
As far as I’m concerned, traveling the absolute best way to spend free time. It allows you to see, hear, eat, learn about, and experience other cultures, sites, sounds, tastes, and more. The experience of traveling helps you become more confident and independent, or can bring you closer together with someone you love. (Read about New Years Travel Resolutions here)
Travel is incredible! But… travel can get expensive quickly.
Unfortunately, thousands of people every year sacrifice their vacation time and travel experiences for work. They choose things like getting Starbucks coffee every day, or eating out for lunch every. single. day. … and then claim they don’t have the money to travel. (le sigh)
So, in 2020, a fantastic financial New Years Resolution for you would be to save up for the vacation of your dreams! Or, at least a very nice vacation for you (and your family) to go and take some time off, experience the world, and bond together!
Trust me, this is worth it.
- Total up last year’s spending and review your choices
Go through ALL of your credit card, debit card, checking, etc statements, and total up your spendings, along with WHAT you spent things on.
Make yourself kind of a ‘reverse’ budget – not about your intentions, but about the reality of your last year.
What did you spend money on? How much did you spend? Are you happy with your choices? What will you change for next year?
Once you’ve done the math, looked at what you did in 2019, and answered the questions above, then it’s time for your next Financial New Years Resolution:
- Create a Budget
Now that you’ve seen what your previous habits were (see how I used all past-tense words there?? that wasn’t an accident) – it’s time to decide how you’ll spend your money in 2020.
This is no small task. This is one of the most important financial New Years Resolutions you can set! This is how you decide what to do with all of the hard earned money you spend.. ALL YEAR.
Think through the long days (and nights) at work, about how you push yourself to make a few extra dollars… now – who will you give that money to in 2020? Starbucks? Amazon? Or an investment or vacation??
This is the time to decide!
- Help someone else in financial need, or give to a charity.
This one is pretty easy. I’m not asking you to give all your hard-earned money away.. but I do think it is the right thing to do to give back in some way.
If you and your family have a roof over your head, heat and air, food and water, and the basics you need to live a healthy life… I strongly urge you to give back, even just a little.
There are thousands of people out there – kids out there – with no home, or no hot meals at night. No warm bed to snuggle into after a long day. No money to pay for the surgeries and medications they desperately need to stay healthy, or alive.
Just think about it. 🙂
- Pay off your car. Completely.
This one is a doozy- but if you’re up for a big challenge in 2020, this may be a great financial New Years Resolution for you.
If you’ve got a car you like and want to keep for ‘the long haul’ – consider paying it off in full. That’ll mean one less bill each month, and one more thing that is fully, completely yours.
- Purchase Life Insurance (or review your policy)
Being financially stable is fine and dandy.. but what will happen to your family if something terrible (god forbid) happens to you?
Have you set your family up for success in the long run?
Do you have life insurance now, while you’re healthy and young- at a good rate? Or will you wait until you’re so old that the rates skyrocket??
Make the wise financial New Years Resolution in 2020 to purchase life insurance – OR, to review and update your policy if you’ve already got one.
- Identify Your Financial Goals
Perhaps these financial New Years Resolutions are inspiring to you, but none quite fit the mold for where YOU personally are in your life, and your financial situation right now.
So, I urge you to use January 1 to think through and create financial goals for your future!
Then, of course – map out HOW you’ll get there. Both in the long term (in 1 year I will ____, in 3 years I will _____, In 10 years I will ____, etc), and in the short term – what steps can you take each month, each week, and each DAY of 2020 to make those goals a reality??
- Track your spending both monthly AND weekly. (Maybe even daily!?)
In 2020, one of the best financial New Years Resolutions for you to set is to track your spending!
First, figure out the big categories of your spending. They usually include: entertainment, clothes, food, drinks, gas, bills, misc., etc. Once you’ve got categories down, you can track what you spend and how!
Each and every week (or day, if you want to be REALLY good.. but remember, we’re sticking to achievable goals, and life is busy), go back through your receipts and card statements, and write down EVERY SINGLE THING you spent money on.
Look back at the budget you’ve hopefully created for yourself and see if you’re sticking to your goals.
If necessary, consider what changes you can make to follow your own rules, meet your goals, and stay on track.
The only way to TRULY know if you’re on course is to track it! Don’t wait until the end of 2020 to find out you were on the wrong path!
- Spend money intentionally. Spend LESS money on things you don’t really need.
These days, we tend to spend money without thinking too much about it.
Amazon purchase here. Starbucks coffee there. Target run yesterday.. oh, and also last week.
But how much of the stuff we buy do we really NEED?
As you start 2020, make it your goal to spend money with intention. To only buy what you truly NEED, or maybe what you truly WANT.
- Look ahead to big ticket items you’ll need to buy this year.
As you’re looking forward through the year 2020, creating budgets, making payment plans, and deciding what your financial New Year will look like.. make sure you take into account any big ticket items that will be coming up soon.
For instance, if you’ll need to purchase a (cheap!) car for your teenager in May, replace the washing machine when it inevitably gives up sometime this year, or will be moving to a new apartment or home… those are NOT small expenses.
You would be remiss to forget them now, at this crucial planning stage!
So for 2020, make the financial New Years Resolution to consider and plan for big ticket items you will need to pay for throughout the year!
- Be debt free at the end of the year. (Become debt free, stay debt free, etc.) OR Set a “Debt free Date”
This may not be possible for everyone, so I’ve separated it out from ‘make a plan to pay off debts.’ However, in order to do this, you will certainly NEED to make a plan to pay off your debts.
This is a BIGGIE.
Being debt free at the end of the year is one of those ultra-common financial New Years Resolutions that many make, and few follow through with. (I would know)
But this is YOUR YEAR. This is YOUR DECADE. Who says you can’t be (or stay) debt free in 2020?
Set your financial intentions and goals, make an action (payment and budget) plan, and stick to it.
Make it YOUR YEAR. (make this year your b!tch)
- Create or Revisit your Retirement Plan
Retirement can seem like it’s a long way off when you’re a young adult.. or even a middle aged adult, the way things are going – BUT, that doesn’t mean you can just pretend like it will never happen (or else it may not ever happen.. yikes)
In order to be a financially responsible, financially stable, forward-thinking adult, you’re going to WANT to set the financial New Years Resolution of creating (or revisiting) your retirement plan.
Figure out what you want to have as your ‘end result’, then work your way back. What do you have to do to get there? How long will it take you? What do you need to do NOW to prepare for later?
- Prepare for the Unexpected, like medical bills
This financial New Years Resolution is quite similar to the emergency fund one listed above, and for some people, they may even overlap.
However, I thought this one was important enough to receive its own slot.
Unexpected things come up all the time, and (especially in America), medical bills are insanely, ridiculously expensive. Like, life-changing-ly expensive, going-into-debt expensive, bankruptcy expensive for some.
Since you simply never know what will happen – babies, car accidents, surgeries, broken arms, cavities, illness, diabetes, WHATEVER it is – you need to be prepared.
If you are able, it would be incredibly smart to create not only an emergency fund for household and normal expenses, but a separate savings fund for medical bills.
Then, even if there are no major medical situations, you’ll still have some money set aside to pay for standard medical things like check ups, sports physicals, normal prescriptions, etc.
- Pay more than the minimum amount due each due date.
To some, this financial New Years Resolution may seem like small potatoes.. but to people in debt, this one is big!
Often, we get stuck in a rut, living paycheck to paycheck, only paying the minimum requirement on our bills – credit card bills, car payments, medical bills, mortgage payments, etc.
If you’re in this situation, I challenge you to create and stick to a budget and lifestyle that will allow you to pay MORE than the bare minimum.
Pay more, and knock out your debt that much faster. Even if it’s just $10 per payment more than is required – that will add up over time!
This is one of those “small” actions that leads to BIG results in the end – don’t underestimate this financial goal for people in debt!
- Invest, conservatively.
Once you’ve got emergency funds in place, you’re paying down debt, or are hopefully debt free, the next step is to start growing your money.
A great way to do that is investing!
Talk to a financial advisor, do your homework, and choose an investment or two that you think will help you out in the LONG RUN. (not in 3 months when you panic or get impatient – LONG. TERM. INVESTMENTS.) and Go in!
If it’s your first time investing, you may want to start small and make sure you’re ready for what you’re getting into. But again, talk to your financial advisor. I am NOT one of those brilliant people. 🙂
- Prepare, review, or update your will.
Another un-fun financial New Years Resolution is to prepare, review, or update your will.
While it is certainly not fun to think about death, you do want to be prepared for when it happens – a long, long time from now.
Make sure you’ve got everything up-to-date with your latest financial records, and that you have made everything perfectly clear for your remaining family members.
You won’t need this for QUITE a while, but when you do, your family thank you for staying on top of this vital document.
- Eat (or drink) out only once per week.
Eating out, and drinking out (starbucks, bars, coke a lunch, beer at dinner, etc) are very common ways that many of us (again, especially Americans) spend A LOT of our money. Arguably too much.
In 2020, set the financial New Years Resolution to eat out less!
If you want to restrict yourself to only once a week, or twice a month, go right ahead. You know the state of your finances (and your waistline 😉 ) better than I do – so you can make an informed decision based on that, AND your typical behaviors – to create an achievable goal for 2020!
- Meal plan, grocery shop, and meal prep every week.
This one is simple!
If you want to spend less on food, do a couple of things:
- Plan your meals.
- Buy ONLY the ingredients you need for your meals (instead of ‘options’)
- Eat out much less, or none at all
- Meal Prep. (cook in advance, use all of the ingredients you just bought to make meals for the week)
You’ve got this. It’s going to help you so much!
- Only pay with cash.
Dave Ramsey STRONGLY believes in this financial New Years Resolution.
If you only pay for things in cash, you can only pay for what you can afford.
No credit cards = No charging = No interest and No Debt
There’s also some psychology behind making the choice to physically hand money over in exchange for goods, vs the ability to swipe and move on like you never lost anything.
Whatever your reasoning, this challenging resolution will CERTAINLY help you keep your spending under control! Because you’ll HAVE to (unless you rob a bank.. but don’t do that!)
- Start a college fund for your children.
The time is ripe for starting a college fund!
Right now, while you’re creating a new budget for 2020, making payment plans, and determining what your financial year will look like – just go ahead and factor in deposits to a college fund for your kids.
Even if the payments are miniscule.
Even if you don’t have kids yet.
Even if you’ve already decided it was “too late” to start one of these.
Speaking as a former college student.. every penny counts.
Help out your [future] children, and save for their education.
- Stick to a budget. (daily, weekly, monthly)
Remember that budget you created?
Now you only have one big financial New Years Resolution job left to truly complete that task.
STICK TO YOUR BUDGET!
Even if you ‘reallllly want’ that pair of shoes, new album, handy kitchen gadget, or ticket to Paris – don’t do it if it’s not in the budget.
Each time you’re about to make an impulse buy, look back at your budget. Literally LOOK AT IT (don’t just think about it) and see if it fits. (It would be handy to keep your budget in a google doc or something you can have on your phone), and see if it fits.
If it doesn’t fit into one of the standard categories, and you think you can make an excuse to shove it into the miscellaneous category.. think through.. do you really need it? want it? Will you use it regularly? Will it make you truly happy?
If you can’t honestly answer yes – then it’s really not for you. Just let it go.
If you reallllllly want to eat out tonight, but your food budget for the month has already been depleted – suck it up, go home, and cook some spaghetti.
Do what you’ve gotta do in 2020 to stick to your budget!
What are your financial New Years Resolutions for 2020?
Leave a comment below and let me know! We can all encourage each other to stay on track all year long!
Happy New Year!
and remember, make good life choices!