The new year is typically a powerful time to reflect on how you want to shift things and/or make positive changes in your life. For some of you, that could mean eating healthier, working out, paying down debt, or developing new financial habits.

Notice that we did not mention anything about New Year’s resolutions. The reason for that is that research has shown that people don’t stick to them!

Instead, we want to provide you with some strategies that are simple yet effective to help you make lifestyle changes—changes that will ultimately not only help you take control of your finances, but also help you become the very best version of your financial self.

1. Be

The first strategy to help you jumpstart your new year is to set S.M.A.R.T. money goals. S.M.A.R.T. is an acronym that stands for Specific, Measurable, Attainable (or Achievable), Realistic, and Timely.

Let’s start with specific and measurable. Here’s an example: Your goal may be to “spend less or invest more.” That's a great goal, but it’s not specific enough. If you instead said, “I will save or invest $1,500 this year,” that’s more specific and also measurable.

Now let’s look at the achievable and realistic components. Using the same example, if you said, “I will invest $125 from each paycheck directly into my savings or retirement account or toward paying down a specific debt,” that is likely achievable and realistic.

Your goal must also be timely, meaning you have a timeframe for doing it. In this example, you said you want to achieve your goal in one year’s time—and $125 per month for 12 months equals $1,500 for the year.

So if you're really serious about achieving your financial goals (or any goals!), make them S.M.A.R.T.

2. Know Your Financial Flow

You have to get real about your spending. Understanding where your money is going is the foundation for developing healthy spending habits. Technology has made tracking your spending easy. There are several apps you can use, most of which are available for all of your devices. You can also follow the "50/30/20 Rule": allocate 50% of your income to meeting your needs, 30% to wants, and 20% to savings.

3. Get on a Debt Diet

You must also get real about your debt. Take some time out to sit down and make a list of all your debt, so you can determine which debt you should pay off first. You might want to begin by clearing off the debts with the smallest balance first and working up, known as the "Debt Snowball Method." Another strategy is to begin paying off the debt with the highest interest rate first, known as the "Debt Avalanche Method."

4. Give Yourself a Cash Cushion

It is important to save for emergencies. The general recommendation or rule of thumb is to maintain somewhere between 3 and 6 months' worth of your take-home pay in savings. If you don't already have this, make achieving it a goal.

5. Invest in Your Future

Try making investing a habit. Begin with your retirement contributions. Set up automatic contributions, if you haven’t already. If you're already doing that, consider increasing your contributions by 2% (or more) of your income, and then set it to automatically increase by the same amount next year.

6. Improve Your Financial Acumen

Finally, make a commitment to improve your financial knowledge. With all of the the online resources available to us today, there’s really no reason not to do so—you just have to carve out the time. Start by identifying three financial ideas or topics you’d like to learn more about in 2020, and then make a commitment to educate yourself on them.

Commitment is key. If you commit to following even a few of these tips over the course of the next year, you can improve your chances of getting your personal finances in gear and achieving your 2020 financial goals. You can do this!


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