Contributing Author: Jay Geddie
As we get closer and closer to the end of the year I am starting to hear people mention resolutions and ways they want to improve in 2020. Of all the future resolutions I hear people mention, I hardly hear anyone talk about finances.
Sooooo I wanted to toss out a few financial tips to help you start 2020 in a financially positive direction!
With most standard savings accounts maxing out at 1% maybe 2 % at best, you may as well bury your money in the back yard.
If you aren’t currently investing, I get it.
I know the idea of doing so may seem daunting because either many of us were never taught how to invest or the news makes it seem incredibly difficult.
However, due to inflation, simply putting your money in a savings account isn’t going to cut it.
The great news is that there are plenty of consistent and pretty hands off investments that you can make that will net you 5-10% per year in growth with fairly little volatility.
If you need a couple to get you started in your research, I’d recommend checking out VTI, VTSAX, SCHG, VYM and any target date funds.
If you are already a consistent investor, I’d recommend increasing your investments by at least 1%. Trust me, you won’t miss it and it will make a huge difference down the road.
2) Build up that rainy day fund!
Everyone needs to have a rainy day fund in case life happens, but statistics show that a large portion of Americans wouldn’t have access to 3 + months of income in the event of an emergency.
If you have trouble with being disciplined enough to put away the money on your own DO NOT beat yourself up, many people struggle with this.
I would recommend having your bank automatically deduct 5% (more or less depending on your situation) from your paycheck and transfer it into a Roth IRA.
Why a Roth IRA? Because Roth IRA’s are awesome!
With a Roth IRA you can invest your money, earn interest tax free, and in the event an emergency arises, you can also withdraw any contributions tax free!
For instance, lets say you have invested/contributed $8,000 over the last two years. Your account has now grown to $9,300 and an emergency arises and you need $4,000.
Due to the power of a Roth IRA you can withdraw that $4,000 tax free, because as I said earlier, contributions are tax free.
Now remember, this is for emergencies only, not that new TV you saw on Black Friday. But with a little discipline, a Roth IRA is great for almost anyone!
*Bonus tip, whenever you pay off a credit card or loan, take at least half of what that payment was and store it away to help build up your account as well.
3) Stick to your budget!
I know a lot of people that have budgets but not a lot that stick to it.
The biggest mistake I see people make is they set a budget that’s not realistic for them.
Chances are you are going to spend more than $100 a month on food, so do yourself a favor a make a realistic budget that you have a shot at sticking to.
Print it, put a copy on the fridge, take a screenshot and put it into your phone. Do whatever you need to do to keep it in mind.
Personally, I use an app called Personal Capital that has been instrumental in keeping up with my families budget. I definitely recommend checking it out. If you find that you don’t like that particular app, that’s fine, just find one that works for you.
Also, if staying on budget while using a credit or debit card as your main form of payment is a challenge, try paying for things in cash. You are a lot more aware of what you are spending when you are physically handing out money.
4) Set a Goal
Take a look at where you are today financially, set a period of time, decide where you want to be, and set a plan to get there. It may seem daunting at first, and honestly you may even fall a little short, but I promise you will be a lot closer than you would’ve been without it.
5) Finally, treat yourself (within reason)
You don’t work all these hours just to pay bills and put your money away for a retirement you honestly may never live to see.
Life is for living, and there are plenty fun things you can do, all while staying on your financial path!
With a little smart planning and research, you can see different parts of the world, eat at some dope places and experience some really cool things all while staying financially healthy!
Here is to a financially healthy 2020!!