5 Easy Tips to Prepare Yourself Financially for 2020

5 Easy Tips to Prepare Yourself Financially for 2020

January 6, 2020

This post is sponsored by Lexington Law.

I’m so excited for 2020, because it’s not just the start of a new year, but the start of a new decade. Realistically you can only say that so many times in a lifetime so it’s pretty cool. Over the last few weeks, I’ve been planning out 2020 in more detail than ever before, for a number of reasons. Financial freedom is a goal we all hope to achieve in our lives, and if you’ve ever felt your finances and credit have held you back, I’ve got some tips to start this new decade off in the right way.

In this image, Adaleta is sitting at her dining room table, writing out her financial goals for 2020. She's utilizing her planner, her computer, and the Lexington Law app on her phone to plan her path to financial freedom.

Create a budget for the new year, and stick to it

Like most things in our lives, things can change. It’s important to sit down and look at your income, your expenses, and your average spending. Some banks offer monthly spending reports, and they aren’t afraid to call you out when you spend a little too much at the local burger joint. Hey, we’ve all done it. There’s a lot of importance with understanding where you’re spending your money, so you can adjust habits and stick to a proper budget.  

If you want to spend $2,000 per month on all expenses (groceries, entertainment, insurance, utilities, etc.) then you first have to evaluate how much you spend on each particular item. Below is a list to get you started on your monthly expense document.

Mortgage

Cellphone

Waste

Internet

YouTube Music

Car Insurance

Home Insurance

Home Insurance (rental)

Dental Insurance

Medical Health Insurance

Vision

Electricity

Groceries

Evaluate what things you can remove from your expenses. If you’ve received something in the mail lately and found yourself thinking, “I really should have canceled this”, set time aside to cancel unnecessary costs. It helps if you go through your monthly statements and see where you’ve been spending money in areas where you should have been saving it (think your local gym, 2 music subscriptions, 5 streaming services, etc.)

Invest in retirement

When it comes to saving money, you don’t want to just save for a “rainy day” but you want to save for 30+ years from now. If you’ve got an employer, you likely have a 401k. If you’re self employed, you’ll want to get an IRA (SEP or Roth) to ensure you’re putting money aside, and investing in your long-term financial stability. The sooner those investment accounts start, the better. The investment continues to grow exponentially over some years and every day really does count, so get those investment accounts started as soon as possible. 2020 is the year for it and you can start accounts with even $5 in them. The important thing is to start the account and get into the mindset of putting money aside.

Always live on less than you make.

This is a tough one for a lot of people because we all have a lot of debt (student loans, car loans, mortgages, 5 credit cards, etc) so the idea of a life without credit seems impossible. However, you don’t need that Louis bag if you have to put it on a credit card to afford it. Credit cards should be for bonus and points, not necessarily to help you pay for items you can realistically afford. I put everything on credit cards because a) if someone does hack my card at least it’s my credit card and b) I want the miles, the cash back, etc. Spending more than you make, spending more than you have, spending more than you plan to pay, are all bad ways to live your life. This comes back to haunt you down the road. 

Get credit cards that give you valuable bonuses

When it comes to the two main credit cards I use, I choose them both because of the amazing bonuses I get back. The American Airlines credit card gets me miles so I can continue traveling, and my Amazon Prime credit card gives me cash back directly to Amazon which is epic since we use Amazon for basically everything in our lives. 

Since most of us will get approved for the majority of credit cards, you have to make sure you’re getting bonuses and discounts that make sense for your general lifestyle. If they don’t close them down, and move on to something that makes more sense. It will hurt your credit to close and open a new one but it is better for you long-term.

Know your credit score, and understand what it means. 

If you’re struggling with your credit score, it’s time to do some credit repair. This often means incorporating some lifestyle changes and bringing on help. It can be very scary, but it’s a step in the right direction. Lexington Law is a known and trusted credit repair firm that works to repair your credit by analyzing any negative errors in your credit score and addressing these errors with the bureaus and your creditors. The power of their support will help alleviate some of the reports filed against you, and in most cases they are able to accelerate the process and eliminate questionable negative items that are hurting your overall credit score. Often there are things that are holding you back that aren’t even your fault. They removed over 10,000,000 negative items on their client’s credit reports in 2017 alone, so it’s no wonder why so many clients trust Lexington Law! 

Once you learn how your credit score affects, create a goal for your credit, and take steps to achieve it. Whether it’s building up your credit and getting yourself a $500 credit card, making some small purchases and paying it back immediately to build rapport or if it’s closing out some cards that don’t allow automatic payments, there’s lots of ways to adjust your life to ensure your credit doesn’t take a hit.

In this image, Adaleta is sitting at her dining room table, writing out her financial goals for 2020. She's utilizing her planner, her computer, and the Lexington Law app on her phone to plan her path to financial freedom.

Give us your best tips and tricks when it comes to being financially savvy. We’re all ears and love learning everyone’s tips.