January is a funny time of year.
On one hand, January represents the opportunity to have a fresh start.
It’s a chance to recommit yourself, set resolutions, and hit the reset button on the year. No matter what happened in 2018, January gives you the chance to put it all behind you and move on.
Yet at the same time, January is nothing special.
It’s another month in the year. It’s got 4 weeks.
For some reason though, we’ve made January the time of year to get our lives back into gear.
Over 50% of the people who make New Year’s Resolutions say their goal is to save more money. If this is you, then I hope this list of financial goals will give you some great targets to shoot for!
This time of year it seems like everyone has a massive post on how to set goals, stick to them, make habits, etc.
I’m not going to take a lot of time trying to teach you how to do this, when there are hundreds of articlbes out there that will do this in detail.
But I do want to give you a quick primer on my personal goal-setting process. This will give you a sneak peek into how I set goals and make progress on them.
Goal Setting in 4 Quick Steps
1. End destination
In order to set goals, you really have to have a good idea of what you want your end destination to look like. Are you trying to be financially independent? Get in shape? Have a healthier marriage?
All of these things are future states that you can reach.
2. Setting goals that get you there
Once you know where you’re trying to go, you need to set goals that will help you get there along the way.
If your goal is to be financially independent, how much money do you need saved up?
If you want to be healthier, how much weight do you need to lose?
3. Create sub-goals
Once you have your major goals set-up, the next step is to create sub-goals or shorter-term targets to get there.
If your goal is to save a million bucks, set your eyes on getting your first $100k saved!
If you want to lose 40lbs, maybe your first target should be 5-10?
The more of these smaller goals you’re able to check off, the more motivation you’ll have to chase after the long-term ones!
4. Break it down
This step is the most important. Most goal setting breaks down at this point, but this is where the magic happens.
The ONE thing you have to do once you have your goals set is to break them down into actionable steps. The key is to create habits and identify processes that will get you there. Some of these can be automated, which will help you reach your goals even faster!
Here are some of our daily / weekly habits that have helped us build wealth:
- Meal prep every Sunday using these 50 cheap meal prep recipes
- Check our credit card statement each month for fraud
- Have a monthly date-night to discuss our finances
- Track our spending using a shared spreadsheet
- Call our banks to increase our credit limit every 6 months
- Automate our retirement savings
- We use ebates & ibotta to save money on everything we buy.
Now for our list of financial goals you can set for yourself in 2019 and beyond! Some of these may be short-term while others could be establishing processes to help you long-term!
Here’s a helpful financial goal setting worksheet to help you map out your goals for this year!
17 Financial Goals for Building Wealth in 2020
1. Fully stocked emergency fund
One of the best financial goals and the #1 place you might want to start is making sure your emergency fund is fully funded! An emergency fund is the key to protecting your finances and building up your financial resiliency.
An emergency fund can protect you in case of job loss, an income drop, or any major unexpected expenses.
My goal here is to help people take control of their finances and establishing a healthy emergency fund is the first step I recommend to people. This is a great financial goal to check off your list this year.
Want more? Check out my Ultimate Guide to Emergency Funds. You’ll learn…
- How big of an emergency fund you need
- More reasons to start one
- How to start one
- Where to keep it
2. Increasing your 401k / 403B / IRA Contribution
If you’ve got your emergency fund taken care of, then the next priority should be trying to funnel as much cash into your retirement investments as possible.
Set a financial goal for yourself to increase your retirement savings by a certain dollar amount or percentage increase!
So if you saved 10% of your income in 2018, then shoot for 15-20% this year! Or, you can set a goal to increase your savings by a dollar amount like $150 more a month into retirement.
One of my goals this year is to increase our contributions to our 403B accounts (the non-profit equivalent of a 401k). This allows us to save money without paying taxes on it! We also contribute to a Roth IRA and I’m hoping to make this my fourth consecutive year to max it out!
If you’re new to trying to save money, check out this guide to investing in the stock market!
3. Increasing your Savings Rate
Your savings rate is the gap between how much money you bring home each month and how much of it your spending.
So if you’re making $4,000 a month and spending $3,000, then you are saving $1,000 a month, giving you a savings rate of 25%.
The higher your savings rate, the more cash you have available each month to put to work for you! You can use the money to pay off debt, save for retirement, or towards any long-term goals like a house downpayment, or a college fund for kids.
Increasing your savings rate is one of the best financial goals for everyone, because it means you have more money to put to use for you!
There are two parts of the savings rate equation. You can either make more money, or spend less. If you’re just starting out, I highly recommend doing both!
Take our savings rate challenge!
4. Increasing your income
If you’re really trying to improve your finances, increasing your income by far has the biggest long-term payoff. A $5,000 raise, invested over time, will add up to hundreds of thousands over a 30 year career.
In 2020, I’m hoping to get a substantial raise after just a cost of living adjustment for 2019.
We’re taking this year to build up this blog and hopefully turn it into a small income stream by the end of 2020. We aren’t expecting anything major as we only devote 5-10 hours a week into the blog, but even $250-500 a month would be a game changer for us.
This year, we’re trying to increase our income by creating multiple streams of income. One major way to increase your income over the long-term is to go to grad school. My buddy Robbie recently wrote up a guide talking that is super helpful talking about “Is an MBA worth it?”
5. Cut $300 from your monthly spending
The easiest way to start building wealth is to decrease your spending! You may not have control of increasing your income, but the way you spend your hard earned money is.
If you were able to cut your spending by a few hundred dollars a month, that would add up to a huge amount of money over a lifetime of saving.
Start by cutting stuff that gives you a high return on effort, get some easy wins, and then work on the high effort–high impact section!
6. Save money without trying any harder
This is a bit of a unique financial goal, but it’s one we’re working towards in 2019. We’ve never really taken advantage of all the great savings apps out there, but this year we want to!
If we can save an extra 5-10% on all purchases through cashback or discounts, we’d be crazy not to!
These are the 3 apps we’re using this year:
Ibotta: Great for saving money on groceries and consumer products
Ebates: SUPER easy to use website extension. Anytime you are shopping online, all you have to do is click the button in the top right and get cash back. There are lots of apps to make money fast that can help you boost your savings!
Travel Hacking: Travel hacking is one of the best ways to save money without actually having to try! All you have to do is open the right kind of credit card and don’t increase your spending.
7. Build the habit of tracking your spending
The first question I ask anyone who wants my help with finances is simple: “Tell me how much you spend each month in each area of your budget. Give me a breakdown of how much you spend, save, etc.”
Most people don’t know this information.
But it is key to really making financial gains. The act of tracking your spending will almost automatically encourage you to spend less.
I recently came full circle again on tracking my spending after realizing that we weren’t making as much progress on our financial goals as we should be. We got back into the habit of tracking our spending and we’ve already seen the results.
I don’t know what it is about human nature, but when we track and measure the things we are trying to improve, we tend to make small decisions and choices that align with our goals.
Think about it… If you’re trying to lose weight, the act of actually tracking your calories will inspire you to make smarter choices throughout the day.
Tracking your spending doesn’t have to be a forever habit, but until you take the time to know how your spending breaks down, you really don’t have an accurate picture to work from.
8. Growing your Net Worth
Everyone wants to build wealth and the typical measure of that is your “net worth.” There are a bunch of different ways to calculate net worth, but we keep ours simple.
We add up all of our liquid assets like cash, checking account, savings account, and all of our investment accounts. Then we subtract out any non-mortgage debt that we have.
Growing your net worth can be a great goal but at the end of the day, it’s only useful for seeing big-picture trends over time. If you’re heavily invested, then the stock market changes so much over time that you really don’t have much direct control on how your net worth performs.
The key to growing your net worth though is to increase your savings rate (#3 above). The more money you have to invest and pay down debt, the more your net worth will grow over time.
My wife and I are trying to front load our retirement savings! At our current pace, we should hit the $1 million mark by the time we turn 38. How long will it take you to save a million dollars?
9. Improving your Credit Score
We live in a world where a great credit score is a necessity. Your credit score is basically a measure of our trustworthy you are in the eyes of a lender. They want to have an assurance that you will be able to pay back whatever you borrow.
A credit score measures that, as best as it can.
It takes into account factors like how many credit accounts you have, how long of a history you have, how consistent you are in making payments, and how much of your available credit you use.
The higher your credit score, the better interest rate you can potentially get,
If you are planning to buy a car or home in the next couple of years, you absolutely need to make improving your credit score a financial goal for 2019!
10. Transfer to an Online Bank
Tired of earning nothing in your cash accounts? Want to get more than 10 cents a year in interest from your bank?
It’s time for you to switch to CIT.
You see, big banks like WellsFargo and Bank of America pay you next to nothing in interest (.01-.06%) while online banks like CIT will pay you 1.85%.
The best part is that once you switch, it takes no additional, long-term effort from you. One and done and you’ll forever be reaping the benefits.
If you are still with a big bank, it is TIME TO SWITCH. Get paid more in interest, invest it, save it, do whatever the heck you want with it. Just make sure you get that money!
11. Creating a debt payoff plan
If you’re weighed down with debt, then the #1 thing you need to do is put together a detailed plan to pay it off. The sooner you can become debt free, the sooner you’ll be less anxious, have more freedom, and be able to save for retirement and everything else.
The reality is, WAY too many people who are stuck in debt have no plan to pay it off.
The key is to create a plan that works for you–that you will stick to.
12. Consumer Debt Freedom
Personally, I don’t think any debt is “good debt,” but some debt can be used at a risk to use for certain purposes.
Consumer debt like credit cards, store credit cards, car loans, personal loans, etc are the FURTHEST thing from “good debt.”
Do yourself a favor and do everything you can to become free from consumer debt. The higher than average interest rates on credit cards are an anchor holding you back from saving and reaching your goals.
My wife and I have about $4,000 left on our car loan and while our mortgage has a higher interest rate, we are eager to get another $330 back every month by paying it off.
13. Make a budget
The key to reaching any of these financial goals is to have a budget that actually reflects what you are hoping to accomplish.
Whether you’re struggling to make ends meet or you make plenty of money but don’t know where it’s all going–you absolutely, 100%, without a doubt, need to make a budget.
I really can’t beat this drum hard enough.
If you want to reach your goals, you have to have a plan and a process to get there. Budgeting is the plan and tracking your spending is the process.
If you aren’t willing to do either one of those, then you really just don’t care enough.
14. Get on the same team with your spouse
There’s no question that money is one of the biggest points of conflict for married couples. If you and your spouse are always fighting about money, then it is time to get on the same team.
This was by far the most impactful things for our financial success. No budget hack or investing tip will save you more money than be unified with your financial partner.
I’ve put together a list of 9 Tips on How to Navigate a Spender-Saver Marriage. My wife and I are trying to build generational wealth to pass down to our kids and create a lasting legacy of giving.
15. Get rid of PMI
If you own a house, then chances are, you’re paying PMI (private mortgage insurance). Almost everyone who isn’t able to put 20% down is forced to pay this to give their lender insurance.
Right now, we’re paying PMI every single month and trust me, I am NOT happy about it. But I love our house and am totally stoked to be building equity, hosting people, and enjoying life.
If you are paying PMI each month like us, that is money being poured down the drain that could be going towards reaching all of your financial goals.
We only put 5% down on our house but thankfully, we were able to build some extra equity by making some improvements on the front end through a 203K loan.
If you’re hesitant on home ownership, check out this guide on whether or not you should rent or buy a house.
16. Give more to others
As a Christian, I believe that giving is one of the greatest joys and responsibilities that we are commanded to do. There’s no doubt that we’re called to care for the poor and needy, serve with our time, and give generously.
But giving is not only for Christians.
We should all aspire to give more and to bless others, especially if we have a decent handle on our finances. It can be tempting to be selfish, hoarding away money for yourself as you try to reach your financial goals.
But personally, I wouldn’t want to accomplish any of the goals on this list unless I was giving along the way.
As you get going into 2019, open up your blinders and consider how you can help others around you. Don’t be so laser-focused on your own goals and dreams that you neglect looking at those around you who are suffering.
17. Start a Side Hustle
One of the best ways to increase your income is to make money on the side. These days, there are hundreds of potential side gigs or side hustles that will allow you to earn more money.
The challenge is finding something you enjoy that you can get paid for.
I work hard all day at work and in grad school. The last thing I want to spend my spare free time doing is surveys or donating plasma.
I want to spend my free time building something that will last. I want to create something that takes effort up front, but that I can continue to reap the rewards from.
This is one of the reasons I started a blog. If you need money now, blogging is NOT the answer.
But I know that I have the pieces in place for this blog to supplement our full-time income. My hope is to keep on creating a bank of incredible articles to help people save more, earn more, and take control of their finances.
The goal is to end this year making $500 a month consistently from the blog!
Let’s hear it!
What are you financial goals for 2020?