A common New Year's resolution is becoming more physically fit. Financial experts recommend folks also consider becoming financially fit in 2020.
Lynn Heider with the Northwest Credit Union Association, which represents more than 170 credit unions, said the first key to better finances is saving. She noted that experts recommend saving enough money to cover living expenses for three to six months as a cushion in case of an emergency, such as job loss or prolonged illness.
"I know that sounds daunting, but you have to start, and once you start, it starts to build up pretty quickly,” Heider said.
Heider suggests ditching unnecessary purchases and considering ways to save on other expenses such as utility and phone bills.
For instance, when choosing that gym membership key to physical fitness goals, consider what parts of the gym you actually use. Large gyms with pools and racquetball courts may be enticing, but unnecessary if you usually stick to the treadmill and weight room.
Heider said people should become fans of automation, setting up auto-pay for rent and bills to avoid late fees and for peace of mind.
She said people should write down budgets and evaluate them with the 50-20-30 rule. The rule said 50-percent of your income should go to essentials, such as rent and utilities, 20-percent toward personal financial goals such as savings and paying off debt, and 30-percent toward flexible expenses, such as entertainment and eating out.
"This will be a way for you to pay off debt, to save money and to sort of go on a financial diet as the New Year starts,” Heider.
Heider added the caveat that if housing costs are high in your area, more money could go toward that expense.
