10 Best Financial Goals for 2020

With 2020 around the corner, it is time to set some goals. I strongly believe to put together goals and to reflect upon the year you had, in terms of finances and the decisions you have made. This will encourage you to place milestones for yourself to accomplish.

Set yourself up for success by making achievable and measurable goals. Decide on what you want to work toward, break it down in smaller tasks, plan it out, and place a time limit so that it is measurable.

Here is a list of 10 financial goals that will help test yourself and put you on the right track

  • Pay off at least one Credit Card
  • Tracking and Budgeting
  • 100% Cash for a Month
  • Donate
  • Max-out a Tax-Free Account
  • Learn a new skill
  • Auto Pay bills
  • Side Hustles
  • Start Investing
  • Minimalist Lifestyle

Pay off at least one credit card

Credit cards are an absolute essential in our society. We need a credit card to build our credit history to be eligible for bigger purchases like a car or a house. It is equally significant because we can spend money now and pay for it later. While it is important to own a credit card, we still must remember to pay it full on time. Otherwise, interest is applied to the borrowed amount which ranges from 17% to 25%. To put it to perspective, the annual return on the Stock Market of 2019 is a bit more than 20%. In comparison, you could pay as much as the return of the S&P 500 Index in 2019, which is insane.

Make this your primary goal for 2020, if you own more than one card, then start small and reasonable. Pick one credit card and start paying in full of what you have in your account.

Tracking and Budgeting

We often spend money without thinking of how hard we work for our money because a credit card is so easy to use. We get access to a few thousands of dollars and have a peace of mind that it will not get rejected, unlike debit cards. With all that buying power, it gets difficult to keep track of all your purchases.

Start by creating a budget for yourself. List all your expenses, followed by your extra expenses, and then put a hard limit on the spending in each category. This would be challenging to figure out how much is spent on each category if you do not track how it’s being spent. You could use apps like Mint, which offers an all-in-one solution to track all your spending and maintain your budget.

100% Cash for a Month

The goal with this is to set yourself up against your credit card for one month. This will be challenging because spending physical cash is psychologically proven to be difficult compared to a credit card. Paying just in cash has three benefits:

1. You will not overspend because you have a certain limit available, which reduces the risk of collecting debt.

2. This will make you think twice before spending your hard-earned money on unnecessary transactions.

3. This will help you assess your dependency on credit.

Donate

With donating it does not have to be a financial contribution. It could be donating your old clothes to a charity organization or if you could spare a few hours to help at a food stamp. You would feel better about yourself, could get a tax rebate, or could make a few friends that could assist you in the future – you never know.

Max out a Tax-Free Account

A tax-free account, as the name states, is a tax-free investment account, meaning any profits or withdrawals made from this account does not get taxed. In Canada, it is called a TFSA and in the U.S it is called a Roth IRA. Since these accounts are important there is a limit an annual limit for depositing to these accounts, but this year it is $6,000.

The goal is to open a Tax-Free Account and deposit $100/month to it. If you already have an account, then the objective is to max it out. The key is to add recurring payment in your bank account to deposit $500 into your tax-free account every month. If you are feeling confident, then try investing some of that money.

Learn a new Skill

This does not have to be a skill related to your profession or making money but a skill you always wanted to learn. If you are a bachelor you could learn cooking, this will always benefit you and for now, save you a ton of money. Another great skill is coding, this will help automate small tasks, create personal apps, and maybe you can set up your own security system at home.

We live in a time where we have access to so much online free content. Take an initiative and start by watching free tutorials on YouTube and reading blogs about it.

Auto Pay Bills

We are usually piled up with bills and tend to forget paying our bills. This could impact your history with the biller, especially if it is your credit card. Set all your bills to autopay, so you never forget paying them and there is one less thing to remember.

Side Hustle

There are many multiple ways to make extra money on the side. The goal is to generate at least $1,000 from a side hustle. This really depends on what you are comfortable doing. Here are a few side hustles to generate some extra income:

  • Airbnb – rent out your home
  • Uber Eats – deliver food
  • Lyft – peer-to-peer taxi
  • Turo – rent your vehicle.
  • Rover – Dog walking app
  • Babysitting

Click here to find some work-from-home side hustles

Start Investing

Make 2020 your first year for investing in the stock market. The idea behind this is to start small with just $100. The reason for that is to get your feet wet with a small amount and gradually increase this to a recurring amount. It will be difficult to watch your money swing on the charts, be in the negatives too much, or in the positives. Just stay calm and remind yourself the reasons why you picked that stock and why you are playing the long game. You only lose when you sell it in a loss.

Aim for a dividend-based investing, which is to invest in companies that are well established and offer a dividend. A dividend is a company sharing its profits with its shareholders, essentially paying the investor to own a stock.

Always remember to avoid the hype unlike me. I made this mistake where my goal was to go for a dividend investing but got caught in the hype of Cannabis. An intuitive company in the Cannabis sector was investigated for illegal activities, as a result the stock dropped 80% of its value in 4 months. Moral of the story stick with your plan and stay away from volatility.

Read more about dividend investing here.

Minimalist Lifestyle

This is my favourite trend that started in 2016 but really developed in 2018. It is a lifestyle change that promotes decluttering your homes. Our society is crazy about shopping and purchases, most of the time buying stuff we barely need.

There are many benefits to a minimalist lifestyle especially when it comes to finances. This will prevent you from spending money on unnecessary stuff, which would help you save more from your salary. This way you put that money to good use or spend it on more meaningful things.

Conclusion

Lastly, I hope this provided you with some useful financial goals to start the new decade. Aim to get at least 7 out 10 in this test. The objective with a goal setting is not to set you up to be rich suddenly nor to burden yourself with these tasks. Instead, align yourself on the right track and to get away from bad habits and unnecessary debt.