We are on the cusp of a whole new decade! As 2019 draws to a close, I thought I’d throw out a post on savvy financial moves for 2020. These are things that we should be doing but often let slide throughout the year as life overtakes us.
Financial success comes from making smart financial decisions that takes into account human nature. In that regard, I believe number 1 on this list is the most important thing that people can do to change their financial future for the better. So here are 5 savvy money moves for 2020.
1. Make a Plan
The most important thing that we can all do about our finances is to take charge and make a financial plan. The best financial plans are ones that automate the process of saving and investing. Check out my post on how to build wealth automatically for more details.
To make a plan, you need to first take stock of your financial position. Ask yourself questions like how much debt do I have? How much savings do I have? What is my income? And what are my expenses? This is basic stuff that every one of us should know.
Next, think about where you want to be a year from now and set realistic goals to get there. An example can be I want to pay down $10k of debt by next year, or I want to have $10k in an emergency fund. Again, nothing too difficult here just some basic things to get ahead financially.
Finally, because people have a very poor record of doing things consistently over time, I highly recommend taking the necessary steps to automate your finances as much as possible.
Set up an automatic savings plan to take money from your checking account and deposit in an emergency savings account. If possible call your mortgage company and have them increase your monthly payment by a $100 a month. Open a retirement account (RRSP) and set up regular contributions.
Financial success doesn’t come from making big money moves, but from doing small things regularly and consistently over time. The reason has to do with compound interest. Basically the first dollar we save is the most important. So be smart and automate your finances in 2020!
2. Learn to Earn More Money
These days, everyone seems to have a side hustle. Earning money on the side is a great way to fund your retirement account or pay off debt.
Whether you sell your services (ie. tutoring), or take a part-time job, or my personal favorite, start an online venture, earning extra money is key to financial success.
3. Destroy Debt
With bankruptcies on the rise, it’s important that we take a look at our debt situation. Each year, I try to reduce my overall debt by 10% (including my mortgage). Debt is such an important part of our finances that we should always set goals to reduce it. For 2020 make a plan to deal with debt.
4. Build Up Savings
We always hear about how half the population can’t even come up with a few hundred bucks in an emergency. That’s why everyone should make it a priority to have a small emergency fund. Having some savings stashed away gives us choices and frees us from having to take on debt to finance life’s emergencies.
The EQ Bank Savings Plus Account and the Tangerine Savings Account are where I keep some of my savings to get the most bang for my buck. Follow the links to check out my reviews of them: EQ Bank Savings Plus Review, Tangerine Review.
5. Invest A Little Bit Often
If you got a handle on your debt and managed to build some savings, then you should consider how to grow your money for a better future. In Canada we have 2 really good options to invest our money: the RRSP and the TFSA. There are important differences between the 2 so check out my post on the TFSA.
When it comes to investing our money, there are lots of options out there. The most important thing to remember is to keep fees to a minimum. For that reason, I believe Questrade offers excellent value because you can buy stocks for cheap (5 bucks a trade), and Index ETFs for free (but pay a trading commission when you sell). If you’re looking for an all-in-one solution, Questrade also has its own low-cost, actively managed Questwealth Portfolios.
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With 2020 just around the corner, take control of your finances and build a better future!
Happy Holidays everyone, I wish you all the best in 2020!
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