Many people are making resolutions for what they want to accomplish for the upcoming year. Part of the resolution-making process involves the excitement of new beginnings and the desire to tackle some big dreams…but what about the other part?
Some people may not be completely pleased with how the last year went and want to switch things up, especially if their personal finances didn’t meet certain expectations. In fact, one area that people seem to struggle with the most is managing their finances and being able to “win” with their money (and no, we don’t mean in the gambling sense).
Studies have shown that U.S. households have increasingly large amounts of debt and that some Americans don’t even have an emergency fund. While this can seem worrisome, the good news is that there are ways that you can get on solid footing and start building your wealth.
The first step is creating a goal that you can focus on over the next month, year and beyond. So if you’re ready to make 2020 an incredible year for both your finances and your life, here are 5 financial goals to put on your to-do list.
Be Able to Live on Less Than You Earn
It sounds simple, but it’s not always easy! Many people may struggle with living within their means because they do not have a solid budget in place. If you struggle with making and/or keeping your budget, there are handy tools to make it easy to set up and track.
When my husband and I first started out with our debt-free journey, we used Mint as an easy, efficient way to keep tabs on our spending. With the app, you can easily see where your money is coming and going, and you can set alerts in order to notify yourself if you get too close to your spending limits. As you bridge that gap between what you earn and what you spend, you can then use that money for your other financial goals.
Build a Rainy Day Fund
While there are many things in life that are out of our control, one simple way to relieve a lot of stress is by setting up an emergency or rainy day fund. When my husband and I were building our fund, we found that setting up automatic transfers helped us accumulate our dollars before we even had a chance to miss them.
Another opportunity to get a jump start on your rainy day fund is with your tax refund. Using TurboTax, we were able to make sure we were getting all the tax deductions and credits we qualified for. We then set up a big chunk of change to go towards savings (and put aside a small amount to go towards fun things too).
Dump Your Debt Faster
Do you have credit card debt, a car loan or student loans? No doubt that it’s frustrating to see so much of your hard earned money going towards chipping away at your debt. However, knocking these different debts out systematically can free up your cash flow and allow you to have some more options.
If you have student loan debt, you may even want to consider refinancing your loans or building a plan with hard deadlines and goals so that you can chip away at your debt throughout the year. One popular method for getting out of debt is the debt snowball — it can give you the psychological wins to help you stay motivated during your debt-free journey.
Make Giving a Core Part of Your Budget
I think many of us underestimate the benefits of giving, which is understandable when you’re living paycheck to paycheck. It can definitely be challenging to do all the things you want while also finding the time to help others, especially when it comes to money.
Giving can help others, enrich your own life, and encourage you to see your money in a different light. Your dollars have a purpose, which can be the mindset shift to help you stay the course with your other money goals. If you aren’t ready to donate more money just yet, you can instead arrange to volunteer more or work in your local community to help neighbors or others in need.
Giving can also help you get a nice tax deduction if you give cash and non-cash items to a 501 (c)(3) charitable organization and you are able to itemize your tax deduction. TurboTax ItsDeductible will help you accurately value and track your charitable contributions throughout the year and the information can be transferred to your TurboTax tax return.
Making Your Goals SMART
Now that you have your goals, take the next step and make them SMART. SMART goals can assist you with having these big money wins. When you create your goal, you want them to be:
- Results-oriented and relevant
So instead of saying “we’re paying off debt this year,” your goal should be “we’re paying off five thousand dollars of our credit card debt this year by December 31st.” Having smaller goals and breaking big amounts down into monthly timelines will help you stay on track and seems less overwhelming than tackling everything at once.
Once your SMART goal is created for the year, now what? You can use your goal to create a new, personalized spending plan. Mint can quickly and easily get you started with a plan. If you’re really looking to really maximize your money, you may want to look at your tax returns. You may be able to optimize your finances so you get the most tax deduction and credits available.
At tax-time, TurboTax will ask you simple questions about you and give you the tax deductions and credits you’re eligible for based on your entries. If you have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent with an average 15 years experience to get your tax questions answered. TurboTax Live CPAs and Enrolled Agents are available in English and Spanish and can also review, sign and file your tax return.