How to reach your money goals in 2020
Five tips to maintaining financial balance this year
The start of a new year is an exciting time to reflect on the previous year and set resolutions for the next 12 months. From a financial perspective, it’s important to look back at what goals you were able to accomplish or make progress toward in 2019.
There’s a chance your goals – and your financial situation – could change in 2020, so it’s a great time to make sure your activities still reflect your aspirations and priorities. Here are five tips to get you started so, by this time next year, you can look back and be proud of all the things you accomplished in 2020:
Review your goals
A lot can change over the course of a year, and the financial goals you set at the beginning of 2019 may need to be adjusted for the upcoming year. Use the SMART method if possible, which means you’re setting goals that are specific, measurable, achievable, relevant and time-bound.
Perhaps you got a new job or promotion along with a good raise, which enables you to save more aggressively. Maybe your home requires significant repairs – a roof or furnace, for example – that can’t be postponed any longer. The start of a new year is a good time to make a list of what’s still important to you, as well as what isn’t, so you can plan accordingly to accomplish your financial goals.
Update your spending plan
Adapt your spending plan so it reflects your 2020 financial goals. If you paid off debt in 2019, congrats. Forty-five percent of Americans say debt makes them feel anxiety on at least a monthly basis, but you can rest easy.
Perhaps you could use money that was dedicated to debt repayment for that trip you’ve been wanting to take. A spending plan shouldn’t feel restrictive, so account for what makes you happy. I suggest figuring out how much you need to save and invest to meet your financial goals. Then you can spend the rest of the money and not feel guilty about it.
Evaluate your investments
For the most part, your investment mix shouldn’t change drastically on a year-to-year basis, but it’s a good idea to reassess annually depending on your financial goals and your stage of life. If you’re nearing retirement age, for example, you may want to move some of your investments out of stocks. They tend to be higher-risk investments and more volatile in the short-term, and bonds may be a better lower-risk option to consider.
A financial advisor can help determine the right mix depending on the individual. If retirement is still several years away, consider upping contributions to your investment accounts by just 1%. The power of compound interest will help your money grow more quickly.
Determine your insurance needs
A comprehensive financial plan should include precautions in case of emergencies. Do you have an emergency fund and, if so, how much is in it to account for unexpected expenses? Do you have life or disability insurance for a worst-case scenario?
If you earned a raise this year, you may want to consider converting your term insurance to a permanent policy. Permanent life insurance offers numerous benefits including tax-free beneficiary payout and predictable premiums.
Mapping out a financial plan will help ensure you meet your goals in the future but remember to enjoy your money today too. Be sure to congratulate yourself on progress by celebrating what you’ve accomplished. When you’re saving for the future and preparing for the unexpected, you have peace of mind that allows you to live each day to its fullest.
As the new year kicks off, it can be challenging to find time to consider some of these factors. An experienced third-party such as a financial advisor can offer invaluable guidance based on experience and expertise. Together you can prioritize your future financial goals so you can take big steps toward achieving them in 2020.
G Michael Jones uses Jones Financial as a marketing name for doing business as representatives of Northwestern Mutual. Jones Financial is not a registered investment adviser, broker-dealer, insurance agency or federal savings bank. Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM) (life and disability insurance, annuities, and life insurance with long-term care benefits) and its subsidiaries. Northwestern Mutual Investment Services, LLC, (NMIS) (securities) a subsidiary of NM, broker-dealer, registered investment adviser, member FINRA and SIPC. G Michael Jones is an Insurance Agent of NM and Registered Representative of NMIS.
Mike Jones is a wealth management advisor with Northwestern Mutual. Mike can be reached at 720-963-6896 or firstname.lastname@example.org