Get ready for 2020? I know it’s just August. And it’s still 2019—the perfect time to start preparing for your 2020 savings goals.
Why? Because your ability to meet your 2020 savings goals depends on how you finish out 2019.
It may be only August and most of us are sweltering in the summer heat. Schools and campuses are opening. We are in the waning days of summer vacation.
But, think about it.
You are now in the 8th month of the year. There are only four months left to meet your 2019 financial goals.
Ahead of you is a season full of holidays—a sort of carbon sink that captures all your money. If you are not prepared financially, the holiday season can easily wipe you out. If you end 2019 in debt, it will be very challenging to meet your 2020 savings goals.
Now is the Time to Get Ready for 2020
Let’s begin with spending.
Here’s a quick run-down on upcoming events that will impact your 2019 budget:
- Labor Day: Barbecues and outings. Maybe you want to get away for a short trip before the official work year begins again.
- Halloween: Costumes, decorations, treats, parties.
- Thanksgiving: Dinner, decorations, visiting family and friends.
- Christmas: We know what goes into this one.
- Travel/Vacation: Maybe you want to travel to friends and family for the holidays. Or maybe you just want to use up your 2019 vacation time.
At a minimum, these are your upcoming expenses. If you have not saved for these events yet, start now.
There are steps you can take to save money on holiday shopping, such as joining your favorite retailers’ social media channels to find out about special sales and coupons.
How much do you need to save now?
How much did you spend last year?
Do you need to make adjustments (staying home this year, gift list is larger or smaller, etc)
How much have you saved?
If you can afford to pay your credit card balance in full when it arrives, then using your charge card to purchase what you need for these celebratory events is no problem. If not, save as much as you can between now and then, and use only cash.
Let’s shift now to saving.
- What goals did you set for yourself at the beginning of the year?
- How close are you?
- Did you set up an emergency savings account?
- Are you investing in your retirement accounts?
- Are you saving for big-ticket purchases and life goals, such as going back to school, traveling, getting married, starting a family or launching a business?
How Much Should you be Saving?
There are some general rules of thumb when it comes to savings, such as the 50/30/20 rule. In this scenario, 50% of your income goes to housing, food, transportation, utilities and such, 30% goes to discretionary items—entertainment and 20% goes to savings, including emergency, retirement and long-term savings for big purchases and meeting life goals.
This is a good formula, and if you can swing it, then you should make every effort to do it. But, a lot of people are living paycheck-to-paycheck. Monthly expenses such as housing, groceries, etc. can take up all of your income. And if you have student loan or credit card debt, you will have a lot less available for saving.
Even if you Think Your Income is Limited, you can Still Save
To get ready for 2020, the most important thing is to save as much as you can. If you have limited income, skip the formulas and create a realistic plan that begins with getting rid of credit card debt and ends with pumping up your emergency and retirement savings accounts. This does not mean the tasks are mutually exclusive. You can do both, but your focus should be on getting rid of debt. Why?
Your debt robs you of money you can put toward your savings goals. Firstly, you will be paying higher interest rates and fees. Secondly, if your credit utilization is high, or you pay bills late or for some other reason your credit score is not good, it will cost you more to do everything. That bad credit score could even cost you a dream job. For certain it will mean higher insurance rates and the worse financing options.
Have you checked your credit report? If you haven’t yet pulled your credit report this year, now is a good time to do it. There could be mistakes. Or your identity could have been compromised. Checking your credit report protects your credit score.
Some final tips:
If saving money is difficult for you, automate. In fact, automate everything. Automate your bill paying, so that you never miss or are late with your bills. Paying on time is an easy way to maintain a good credit score. Automate your savings. There are many fintech apps that make it easy to send money directly from your bank account to your savings accounts, according to your instructions.
And finally, be flexible. If you fail to meet your goals, adjust, start over and keep going.