The New Year’s Eve already passed and we are well into 2020. The New Year’s Eve is a sort of a timestamp where people can start from scratch, allowing themselves to make extreme changes, decisions, and resolutions in their lives. Whether you decide to start eating healthy, working out, reading or being more environmentally friendly, it is a positive change in your life.
However, if you want to support these new decisions you have made in your life, you will need to be financially stable. So, while you still have time, make the right changes to improve your financial situation. Once you create your plan for this year, just make sure to stick with it and you will notice how much money you will have saved while still living satisfyingly throughout the year.
So, how does one start to make smart financial decisions? Well, you cannot create a plan when you have no idea what you should plan, right? This is why we have made a list of the top 10 financial tips for 2020.
1. Create a budget
Having a budget every single month or all-year-round can feel a bit annoying because you are constantly restricted about your spending. But, a budget is not only about limiting the amount of money you waste, but it is also a great way to help you realize where you spend it. With a proper budget, you will be able to live your life the way you want while also cutting on expenses that you do not really need.
However, to create the perfect budget you will have to go through all of your expenses. First, you will need to focus on the most important part and that’s electricity, water, phone, internet bills, and rent or mortgage. These are some of the things you cannot live without and you simply cannot cut back on these costs. Make a sum of all of these costs and then add them to your budget.
After creating this budget you will have an easier time understanding how much room you have left for other stuff such as entertainment, clothing, gifts and so on.
If you are having trouble following your budget, try to contact your bank to create a limit on your credit/debit card for monthly expenses.
2. Pay your debts
I know, this is very easy to say, but very hard to do. Credit card debts can reach up to tens of thousands of dollars and repaying it may seem impossible at times. According to recent studies, more than half of US citizens have a credit card debt that’s higher than $5,000. The same study claims that it is much financially smarter to repay that debt as fast as possible as the interest on such an amount can cost you a lot more than you think.
There are a couple of strategies for paying down your debt. According to Bail Bonding Now, a bail bonds service in Fulton County, Georgia, the easiest way is to take care of your smallest debts first. By knocking out each debt one-by-one, you create a snowball effect. The smallest ones are the easiest, but it puts you on a path towards getting all of your loans and debts are taken care of. Progress over perfection is key here.
If you do not have that kind of cash on you, we would even recommend getting a loan to repay all of your debts since loans tend to have a much smaller interest rate than most banks.
3. Don’t open multiple credit cards
According to the same study we mentioned previously, the average United States citizen has at least four credit cards in their wallet every single day. Honestly, that is four times more than they should have unless you believe you can manage them properly.
So, if you do not want to pay thousands of dollars every single year in interest rates, we recommend that you stick with one or a maximum of two credit cards.
4. Regular insight into your bank account
As suggested by Eyal Nachum, everyone should build the habit of constantly checking the status of your bank account. Not only is it a safety habit, to ensure that no one else has access to your account, but it will also give insight on your expenses. It will help you understand where your money goes every single month. By constantly checking your bank account transactions, you will think twice the next time you want to buy that huge TV for your living room.
Another great way to improve your financial situation is to start investing. You do not need to go all out on the investments, but adding a bit every month into your investment account will decrease your risk and increase the chances of making some serious money. At first play safe with the stock prices, the more stable ones and once you feel comfortable in this market to start making more serious decisions.
6. Student loans
While we already covered the debt part in your life, student loans still deserve its own place on this list. In this modern age, almost every single person who has gone to college has had at least one student loan. Most of the time, these loans are usually left unpaid for years and years.
It is time to start focus on this problem and repay it as soon as possible. Most experts recommend that you prioritize the loans who have the highest interest rate. After you do this, you will understand that it is not such an impossible feat to repay your loans.
7. Cut down on takeaway food
You won’t believe this, but a lot of people spend thousands of dollars every year on takeaway food because they do not have the time to prepare home-cooked meals. Not only is it cheaper to cook at home, but it is a lot healthier than you would think. So, take some time to do grocery shopping and start honing your cooking skills if you want to save up some money this year around.
8. Start improving your credit score
This should also be your priority if you want to improve your financial situation in 2020. You can do this by paying all of your bills on time, paying off your loans and debts and so on.
9. Create a habit of checking your credit score
Even if you start paying your bills on time and you have started paying off all of your debts, you should still start checking your credit score to ensure that it is still going up instead of down.
10. Strive for a promotion or a new job
And last, but not least is to simply find a new job or get a promotion. You need to constantly strive to increase your income. With a better income, you will have a much easier time improving your financial status.