New Year, New (Financial) You! 5 Tips to Manage Your Money In 2020

Lose weight. Get in shape. Save more money. Lots of people set admirable goals when they’re making their New Year’s resolutions, but it can be hard to follow through. That’s why it’s important to have a plan to make your goals stick.

Just like you wouldn’t try to lose 20 pounds without a healthy diet, or hit your fitness targets without a workout routine, you need to plan ahead if you want to meet your financial goals. Here are some steps you can take to get your financial house in order.

Set a Budget

If you don’t already track your spending habits, making a budget is one of the best ways to start getting a handle on your finances. Start by taking a look at your current spending. Review bank and credit card statements, and skim your calendar to jot down big upcoming or annual expenses like vacations, property taxes, and Christmas. Take inventory of all your sources of income, and write down key financial goals, like paying off debt, or saving a certain amount of money. Then allocate your income toward your expenses and goals.

Once you set a budget, it’s key to stick with it. Keep track of your spending to make sure you’re staying within your budget. While lots of people find that a simple notebook or spreadsheet is all they need to get started, others find that one of the many budgeting apps on the market makes the process even easier.

Manage Debt

Debt can be a drag on the rest of your finances, slowing you down from meeting your long-term goals. You simply may not be able to pay off your debt right away, so come up with a strategy to manage it and bring it under control. Sort your debt to prioritize what’s costing you the most — such as a high-interest credit card bill — and pay those balances first. Make sure you’re paying more than the minimum balance each month, to make a dent in your debt.

If you have a high-interest credit card, see if you can move the debt to a card with a zero-interest balance transfer (you’ll need to be sure you can pay it all off before the balance transfer expires, or you could be stuck paying an even higher rate). Finally, stop using your credit cards and live off cash for a while, to stop adding to your debt while you pay off your balance.

Bring Health Care Costs Under Control

For many families, the rising cost of health care is a major concern. There are many ways you can bring some of these costs under control. Save money on prescriptions by asking your doctor if you can switch to generic alternatives, and make sure you’re finding discounts or the lowest prices on your medications by using RxSaver If you have a health plan with a high deductible, consider opening a Health Savings Account, and make sure you’re using the money in your HSA to pay for your medical expenses. Finally, taking care of your health by getting routine screenings and preventative care can save you money in the long run, by helping you catch problems early while they are easy to treat.

Check Your Investments

If you’ve been stashing money in a 401(k), college savings plan, or another long-term savings account, the new year is a good time to review your investments and make sure they’re still in line with your goals. If you’re getting close to retirement or are within a few years of taking money out of one of your accounts, it may be time to start moving money into lower-risk funds or even cash. Make sure your investments are diversified to spread out your risk, and don’t forget to rebalance your portfolio at least twice a year.

Make Sure You Have Adequate Insurance Coverage

It’s not pleasant to think about death and disability, but planning ahead for these worst-case-scenarios is a critical step in protecting yourself financially. If you have children or other dependents, you should have a life insurance policy. The amount of coverage you need can change at different stages of your life, so review your policy and make sure it’s adequate to meet your family’s current needs. Disability, long-term care insurance, and homeowner’s or renter’s insurance can also be a good idea, depending on your stage of life. Finally, don’t forget to update the beneficiaries on your insurance policies after major life events, like having children and getting divorced, and to review them periodically to make sure they’re current.

Many people find personal finance overwhelming or confusing, but it doesn’t have to be. By starting small and taking a few simple steps, you can take control of your finances and make sure your money is working hard for you. So this New Year, raise a glass to a more prosperous and financially secure 2020!