Smart financial goals to help you manage your money, better in 2020
As we usher in a New Year, it’s an opportunity to set goals for what you want to achieve in 2020. And tackling money and finances is a goal that many of us will have in mind.
Rather than setting resolutions you’ll keep for a week (edit: see my January 2017 gym membership), you use this time to set meaningful money goals for the year ahead that you’ll actually stick with.
- Why set financial goals? It means that you have a clear vision for 2020 and what you want to achieve this coming year.
- Why is 2020 special? 2020 is a leap year so you now have 366 days ahead of you to kickstart better money habits.
- Why is this a good time to set money goals? A new year means that you have a whole year to reshape your finances. Whether it’s starting 2021 with an extra $10,000 in your pocket or no longer having to worry about money, setting goals means you can maximise your time in 2020 to put your future-self in a better financial position.
Ready to get started?
Here are the Top 10 money goals to kickstart your finances in 2020:
1. Build an emergency fund
Life emergencies happen.
Washing machines break, people get sick and can’t work, cars break down at random.
How you react to life emergencies can depend on whether you have an emergency fund. An emergency fund is the cash you keep for emergencies. The 2018 ANZ Financial Wellbeing report (listed in the Financial Literacy Hub) found that 22% of Australians don’t have any savings, which means not having money to draw on in an emergency. If you want to enjoy more security when it comes to your money, building your emergency fund is a great goal for 2020.
Read more at: Why you need an emergency fund
2. Automate your savings
If you want to start saving money, you need to ensure that you’re not going to be tempted to spend money intended for savings. I take the guess work out of saving by automating how much I save each pay.
What does that look like?
- I opened a separate savings account with another bank (so I can’t see it)
- I set-up an automatic transfer to my savings account around pay day
- I get paid (woo hoo!)
- Part of my pay cheque is automatically transferred to my separate savings account (and over time, I don’t notice it because the money isn’t mine to spend)
Over time, automating savings can have a huge impact. If you save $100 a week, this adds up to $5,200 saved in just 1 year, which could be going towards your emergency fund. If you’re keen to build up your savings, automating that savings payment each week can be a great place to start.
Read more at: 5 steps to building your emergency fund
3. Take control of your debt
Whether it’s credit card debt or overindulging in Afterpay, too many of us are being weighed down by debt. I say weighed down because that’s literally what it feels like. Debt is an obligation that our past-selves took on but that our future-selves will have to pay off.
In 2020, set your future-self up to enjoy more freedom by taking control of debt. Add up how much you owe and work out how much you can start paying back each week, fortnight or month. Look at how you can make extra money and direct this towards your debt.
Money is most powerful when we use it as a tool to make choices we want and to ensure our safety, security or freedom. Give your future-self that choice and take control of your debt in 2020.
Read more at: 5 ways to make extra spending money
4. Make a budget
The best way to control your money is to know exactly where it’s going. A budget means not only knowing where your money is going but also planning where you want your money to go so you’re not leaving it to chance. People who say you don’t need a budget are incredibly lucky – they’re also incredibly privileged if they don’t need to plan where their money goes.
You don’t need to obsess over a complicated spreadsheet. You just need to get a clear picture of where your money is going so that you can use the money you have to satisfy your needs, indulge in what you want and save towards long term goals.
Read more at: How to Budget in 10 minutes
5. Have a no spend day
Have you noticed that you’re buying coffee every day?
Are you also now also buying a muffin with your coffee?
Are you not even appreciating that daily coffee and muffin because it’s become your new normal?
It’s becoming easier to just tap your card and spend money without thinking about it. This kind of spending on non-essentials can really add up.
If you feel like your spending is getting out of control, a no spend day can help reset your habits. A no spend day means not spending money on non-essentials for one day. The process forces you to think before you spend money so that you become more mindful about your spending.
I’ll be documenting my own no spend day shortly to share my experience. If you want more discipline and control over your spending, try having a no spend day to reset your spending habits.
6. Take advantage of your work benefits
When it comes to our work benefits, many of us are guilty of leaving money on the table. Work benefits I’ve seen include:
- Subsidies for gym memberships
- Salary sacrificing to save money on car payments
- Free dinners when you’re working late
- Allowances for meals when travelling
These benefits are part of your employment contract so take time to look into your work benefits and make sure that you’re using them.
Learn from my mistake on this: I was asked to work late at the office for months and never claimed the dinner allowance because I didn’t know I was entitled to it. You’re not being greedy – you are using the work benefits you signed up to as part of your employment. Look into your work benefits in 2020 to ensure that you use these benefits when you are entitled to do so.
7. Start investing now
When you see the word investing, the Wolf of Wall Street might spring to mind. However, it’s not just Gordon Gecko who can benefit from investing. When done in a sustainable way, investing means that your money increases over time thanks to compound interest.
Compound interest is similar to a snowball rolling down a mountain. The snowball picks up more snow as it rolls down so that the snowball gets bigger over time. Investing isn’t risk free which is why I would encourage you to first set up an emergency fund and ensure that you’re investing money within your budget. Money is a tool for us to make a difference, both in our own lives and to the world around us and investing to increase your wealth can be a great way to do that.
Read more at: Start investing now
8. Sort out your Super
Super is an investment in your future self. For non-Australian readers, Super is the Australian equivalent of a retirement fund or what you’ll have to draw on when you choose to stop working. But Super is one of those things that we love to put off because it’s a future you problem that you can easily put off til later.
Whether you retire into acrylic or cashmere is up to you. But the sooner you take action to sort out your super, the sooner your future is taken care of.
Read more at: Sort out your Super in 15 minutes
9. Invest in your health
Whether it’s managing our weight or getting our teeth checked, it’s all too easy to put off health decisions until we’re less busy. Unfortunately this can lead to health issues not being addressed until they become an emergency.
2020 is the year that changes. A yearly check up at the doctor or dentist will pick up issues when they’re still manageable and you can fix them yourself.
Taking action to monitor health issues now means saving money on potential medical bills and health insurance excess payments later. Investing in your health can be one of the smartest decisions you make. You only have one body in life so take care of it in the same way that you would take supreme care of the only car you’ll ever own.
10. Learn about money
How did you learn best in school?
Some of us loved learn by reading about a topic. You may prefer to learn by listening or to soak up what you can and learn by doing.
I learned more about personal finance by reading as much as I could, listening to finance podcasts and immersing myself in finance content.
I regularly get asked what books I would recommend to those wanting to learn more about money about I’ve listed these books in the Financial Literacy Hub.
We’ll also be launching a podcast in 2020 that showcases conversations around money so that more of us can talk about money. Money affects us all and in opening up the conversation and showcasing different experiences around money, we include more people in the discussion.
Half of Australia doesn’t talk about money which is weird given that we all spend, earn and use money in our everyday lives. Defy the stereotype and start learning more about money in 2020.
Read more at: Financial Literacy Hub
Setting your money goals for 2020 means getting a clear vision of what you want to achieve in the coming year.
Neil Gaiman is one of my favourite authors and I love his approach to decision making. Imagine your goal as a mountain so that when you need to make a decision, you can make choices based on whether they take you towards or away from the mountain. Apply that to your money goals in 2020 and ensure that you’re putting yourself in a better position for 2021.
Read more at: 7 lessons I learned about money in 2019