Friday, January 17, 2020

Healthy Money Habits for 2020

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I love the fresh start of a new year.  Even if I don't start things exactly on January 1, I still always feel like I can take January to assess and make year long goals and commit to new habits.  Ones that will make me a better, healthier person, finances included.  So for this year, if you're looking to set up some financial goals for yourself, I have these healthy money habits to share with you.  What will you be adopting in 2020?

Create a budget.  If you've never made a budget before and stuck to it for a few months, you're missing out!  Really.  A budget gives you permission to spend.  Betsy started making budgets last year and almost immediately commented how freeing it was, rather than restricting.  No more guilt over purchases, with the added bonus of telling your money where to go and knowing, at the end of the month and year, exactly where it went.  It generally takes 3 months to make a successful budget that's in line with your spending and goals, so don't get discouraged if the first month doesn't go according to plan.

Pay off debt.  If you have any debt, from student loans to car loans to credit cards, make 2020 the year you commit to paying those things off.  Having debt hanging over you is the worst.  Don't buy into the thinking that debt is normal or that you'll always have it - debt is a shackle and you absolutely should not have it.  Your life will be better if you don't!  I highly recommend the Dave Ramsey debt snowball plan, which I'll have more information on next Friday.

Increase savings.  If you've paid off debt, the next step is beefing up that savings so you don't have to once again turn to credit in times of an emergency.  Ideally, you want to have at least 3 to 6 months worth of expenses in your savings account if you don't have any debt.  This is to cover necessary expenses, like food and housing, in times of a true emergency, like unexpected job loss or illness.  It's not about saving for vacations or Christmas.  Just the basics.

Save for retirement.  The younger you start, the better off you'll be, but no matter what age you are, you should be saving for retirement.  Well, unless you're already retired of course.  If your employer offers a match, at least get that - free money!  But once you have debt paid off and your savings increased, try putting at least 15% of your income towards retirement. 

Become more of a minimalist and lead a simpler life.  One of the many benefits of my minimalist lifestyle is how much simpler it makes my spending.  I have very little that I actually need to buy.  Try to simplify things in your life and spend only on the things you truly need.

Align your spending with your values.  Even if your value isn't minimalism and spending nothing, what you do spend on should still align with your values.  And if you value travel and vacation, that's fine!  Maybe you value pets or donations or early retirement.  It doesn't matter.  What does matter is that your spending should align with that - if you don't value 75 pairs of shoes or chipotle for the 3rd time this week, stop spending on those things.  Every time you say yes with your dollars to one thing, you're automatically saying no to something else.  Remember that.

Continue to learn.  Things are always changing when it comes to finances.  Continue to learn what you don't know.  Lack of knowledge should never be the reason why you don't do things like saving or investing.  Learn!  I'm certainly not the only blogger who shares on this topic, there is a ton of free information online.  You can check out books on the topic from the library.  Whatever it is you need to learn about, you can find the information if you make the time.

Any healthy money habits you swear by?  Share your knowledge in the comments.

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