The year 2020 is just around the corner, which means countless Americans are gearing up to improve their finances once it kicks off. Here are Americans’ chief financial goals going into the new year, according to a survey by Marcus by Goldman Sachs — and what you can do to achieve them.
1. Save more money
We all need savings on hand, both for emergencies as well as retirement. If you don’t have enough cash reserves in the bank to pay for at least three months of essential living expenses, then building your emergency fund should be your primary financial goal for 2020. Once you have that cushion, you can begin setting aside funds in an IRA or 401(k) as retirement savings.
Of course, coming up with that money to save is easier said than done. To that end, one of the best ways to help yourself is to set up a budget. That way, you’ll see what your expenses cost you month after month, and you’ll have an easier time identifying which ones to cut back on.
And to be clear, you most likely will need to reduce your spending in certain categories to free up money for savings. That could mean dining out less frequently, canceling a gym membership you don’t use often, or cutting the cord with cable and signing up for a low-cost streaming service instead.
Another great way to drum up extra money for savings? Get yourself a second job. These days, you can turn a host of hobbies into a side hustle, and that way, you’ll get paid for doing something you love. You can also try consulting in your current field on weeknights and weekends (for example, if you’re a web developer, take on a few private clients) or monetizing your vehicle by signing up to drive for a rideshare company. There are plenty of options to consider, but if you earn money outside your regular paycheck, you’ll have the option to save all of it (minus taxes, of course).
2. Pay off debt
Debt tends to fall into two categories — the healthy kind and the unhealthy kind. Mortgage debt and student loans belong in the first category, while credit card debt very much monopolizes the second. If you’re loaded up on credit card debt, you can shed it more quickly by following the aforementioned advice — organize your expenses in a budget, cut back on spending as much as you can, and get a side gig to boost your income. At the same time, you’ll need a solid debt payoff plan to ensure that you’re tackling that burden efficiently.
One good way to pay off debt is to take a look at your various obligations, see what they cost you, and pay them off from highest interest rate to lowest. For example, if you have one credit card balance in the amount of $2,000 with a 12% interest rate attached to it, and another $7,000 balance with a 16% interest rate, you may be inclined to tackle the $2,000 balance first, since it’s much smaller. But actually, what you should be doing is chipping away at the $7,000 balance first, since its interest rate is higher.
Another option? Transfer your existing balances onto a single credit card with a lower interest rate. Some cards even give you a 0% introductory rate, which you may very well qualify for if you have good credit. There’s also the option to consolidate your different balances into a loan with a more favorable interest rate to avoid having to keep up with multiple payments each month.
Saving more money and paying off debt are two critical goals that Americans are setting for themselves in 2020. If your bank or retirement account needs a boost, and if you’re tired of walking around saddled with credit card balances, then you’d be wise to add them to your list of resolutions as well.