Among all the goals that my wife and I set every year, an end of the year savings amount is a major milestone. As I review the past several years of planning, I can give ourselves a score on our financial discipline and control. Truly, that number representing your cash worth on December 31st should be higher than the one from twelve months prior. According to a CNBC article, millennials have barely $5,000 in savings and their older relatives 55 to 64, do a little better with on average, about $16,000 in savings. Not considering investments, which can be insufficient, these numbers are, extremely alarming. A simple emergency or unexpected expense can wipe if all.
The objective of saving up money and live under your means is to lead a financially stable existence without the need for damaging debt. In many cases, for millennials now moving in their thirties, it can be a tremendous assistance to make useful investments that will pay off in the long run.
As you start 2020 towards your goal, it is important to make savings and budgeting a financial priority. Your savings goal is personal to you, to your needs and your financial situation. How much should you save? My wish for you is that you aim at gradually reaching 20% of your income. Here are a few common categories you may eyeing as well.
If you have any level of financial independence in your life, you’ve experienced some emergency that had required a considerable amount of money as an expenditure. Those moments are not fun for the pocket. Unfortunately, we cannot plan for them but only financially. Emergencies will come and will strike you if you’re not prepared. The solution: put money away as your saving grace. Usual unexpected emergencies include car repairs, home repairs or medical care. For some of us who are homeowners, home repairs are simply a part of life. Reverting only to debt is a bad move and can hinder your progress towards financial stability. By having savings set aside, you can pay these emergency costs without the need for unnecessary interest in the long run.
Boring, I know; but indispensable and necessary. Your retirement may seem a long way down the road, however you should be meticulous and serious about it. More than 6 in 10 American are not ready for retirement, and almost 1 in 2 people don’t care. How dangerous is that!
The more you save now, the earlier you can afford to retire. This ensures that you can truly enjoy the latter years of your life rather than having to ‘get by’ or be destitute. Some employers offer 401(k) plans that can allow you to allocate this money straight out of your earnings, so you don’t even have to feel as if you’re missing it. I’m sure you’re familiar with this concept. You should of course save up additional funds and think of other investment avenues.
Your next vacation in 2020
When the warmer seasons come around, Americans start taking time away from work. In fact, it is necessary to take breaks to recharge. But should it be at the expense of your finances? I think not. Rather than funding your next break away with a loan or your credit cards, why not start saving up now? Paying for a vacation with your savings can allow you to enjoy it even more knowing that you’ve truly earned it. When you pay for a vacation with a loan, you’re more likely to regret it afterwards due to the monthly repayments.
Sometimes, we must sacrifice or delay for better gratification. While everyone is taking time their vacation, it may be a season of opportunities for you. Are there projects are work that you’ve wanted to work on for a while that suddenly got scheduled? Are there assignments you could work on that would add weight to your resume? Are there opportunities to make money and increase your savings? Consider these when planning time for vacation.
Your first home
One of the biggest financial decisions you will make in your life is the purchase of a home. Is the purchase of a home on your radar in 2020? Should you rent or buy your home?
For starters, before you commit to any purchase you should have been speaking to an advisor. This includes a realtor, a professional with experience who knows you, what you’re looking for and the market. Ideally, someone who’s had success in this field will be the right choice. You also need the expertise of a professional on the financial side. The last thing you want is to have built up your excitement only to find that you’re not prepared for the lending aspect of buying your first property.
Your budget and savings are crucial. Look at properties in the area you’d like to live and work out how much you need to save. Then, sit down and write a plan. As I said above, you should not only consider the mortgage payment. One of the reasons why some people dislike home ownership is the added cost. Trust me, I wish I could call a landlord who would take the responsibility to pay and fix any appliance or system. I am the owner and it all falls on me. Consider extra expenses when budgeting for a home. Decide how much you should save every month and for how long to reach your timely goal.