Entrepreneurs…retirees…investors…savers! Can’t see how you’ll build that nest egg or get ahead in 2020? Crystal balls are in short supply. But predicting your 2020 financial picture isn’t impossible or difficult. Time to take a 10,000-foot view.
It’s January 2020…and your financial conscience is calling. Do you expect a stack of credit card bills soon? Drained your emergency fund or didn’t make that 2019 IRA contribution? No updated budget or savings plan? Too many financial to-dos, too little time and don’t know what to tackle first? So many of us let financial quicksand distract or muddle our thinking.
One of the smartest moves you can make right now is getting a grip on your financial picture – where you are and where you want to be. That means organizing financial paperwork, understanding your numbers and staying informed. This gives you a solid base with decision points to target as 2020 unfolds. So then you won’t need to make snap decisions or fear you will miss out.
Time to Make Smart Money Moves
Money-smart consumers take time to strategize with “what if…” scenarios, and they set goals. They aim to be financially nimble. What a great position to be in, just as astute shoppers know whether to stock up or avoid a flash sale when they discover one.
But how do you get positioned to reap the rewards if you’re not a financial guru? There are so many global and economic factors that no one can predict the best money moves with great certainty, though many try.
No One Owns That Coveted Crystal Ball
While you can’t forecast 2020 outcomes any better than financial experts, you can do something about your own financial picture. Here’s how to strategize and get a grip:
- Calculate your net worth. Your net worth statement = assets minus liabilities. Where’s the beef? How much did you grow (or deplete) that nest egg last year? How can you grow it this year?
- Update your list saving/investing goals. What do you need/want to buy – this year and longer term? Can you predict any cuts? Can you find money to invest?
- Tally last year’s expenses. This is your 2019 budget, in the rear-view mirror. Were you under or over budget? What changes will you make?
- Create your 2020 budget. Judging from last year’s spending, plan a new budget. Especially note any major purchases you anticipate or emergencies that might catch you off guard. Can you cut any fat from last year?
- Review your credit report. Good credit is a must if you need to borrow. In fact, beefing up your score and thereby reaping a better borrowing rate could save more money than you realize. To know if there’s something to squeal about, get your free credit report at http://www.annualcreditreport.com.
So looking over these numbers – your budget and expenses, net worth, goals, credit – will give you a great birds-eye view of your finances. Then you can move strategically to adjust and improve in 2020. You might decide to contribute less to your 401k and speed up payments on student loans, convert an IRA to a Roth IRA, or close some credit card accounts. But without knowing where you stand, it would be hard to make any of these decisions, wouldn’t it?
Remember this financial review is not a once-and-done look, but a task you can do every January. Since building wealth is more like running a marathon than sprinting a 50-yard dash, the good news is you have time to adapt – change lanes, pick up your pace, adjust your stride – to get ahead of the herd rather than get left in the dust!
*Be sure to read IRS publications for explanations of new changes that may affect your tax situation. As always, this blog is educational in nature and does not offer specific financial advice. Consult a tax advisor in regard to your own circumstances.