Save and Invest

I've written about money for over 5 years—here's how I'm getting my own finances in order before 2020

Alicia Adamczyk

How are you preparing your finances for 2020? Email reporter Alicia Adamczyk at alicia.adamczyk@nbcuni.com for a chance to be featured on CNBC Make it.

With less than three months left before the start of a new year and a new decade, I've been thinking more and more about where my finances stand currently, and where I'd like them to be.

Over the past year, I've made strides to strengthen my financial foundation: I've reviewed all of my investments, increased my savings and feel, generally, comfortable with where my money is going. But at the same time, I'm still wasting money on frivolous expenses, especially food and convenience items, and it can be frustrating to see how "little" I have stashed away compared to what I think I should have at this point in my career.

I'm on the fence about New Year's resolutions: Research shows that people rarely accomplish the goals they set at the beginning of the year. What is the point of making a big deal out of what is, ultimately, an arbitrary time of year?

Still, I love setting goals and think that they are personally beneficial, especially for something as important as your money. And to accomplish them, you need a simple, actionable plan.

For me, that means sitting down with a pen and paper and thinking through what I actually want to achieve in the next 12 months and how I can get there. And I'm not waiting until January to start planning.

This strategy might work for you, too — after five-plus years of writing about money, I've learned a lot about what actually helps people get their finances in order. Here are four steps I'm taking to do that in 2020.

1. Review what I spent in 2019

To figure out where I want to go in 2020, I need to see where I've been.

To do this, I am scheduling a Personal Inventory Day (PID) with myself. A PID is a concept I first came across while listening to the podcast "Call Your Girlfriend." Guest Sabrina Hersi Issa, a human rights technologist, explains that once a month, on the same date (say, the 20th), she tackles all of the life admin tasks she needs to accomplish, based off of a to-do list she keeps throughout the previous few weeks. That could be taking shoes to the cobbler, negotiating a cable bill, finally going in for that teeth cleaning — you get the picture.

There are a few money-related tasks I have planned for my PID, but the main one is reviewing my spending from the past year. That means pulling up all of my credit card and bank statements for 2019 and asking myself the following:

  • How much did I spend each month on necessities, how much on wants, etc.?
  • Of those expenditures, what would I consider money wasted?
  • Where are obvious places I'm over-spending?
  • What are the things I don't remember buying?
  • What does my savings look like in relation to my spending?

I have a head start on this because I've tracked my spending, savings and investments for the past six months. Still, a deeper analysis is needed. If I want to get serious about my goals, like significantly scaling back food spending, then I need to have all of the information on where my money is going. And though I've been tracking my expenses, I haven't taken the additional time to really analyze my spending patterns and set concrete budget figures.

VIDEO1:0001:00
Personal finance expert David Bach's formula for becoming a millionaire

Another thing I'd like to work on is planning ahead. In past review sessions, I've learned that I could save a lot of money by being more proactive. That applies to "easy" changes, like planning meals and lunches, and buying toiletries on sale before I run out. But it also means looking further into the future and thinking about potential vacations, major events I'm attending or classes I want to take.

In some ways this is the most basic task on the list, but it's also the most important. Facing habits head-on is the key to changing them. And it's always good to take time to see if your spending accurately reflects the kind of person you want to be and the life you want to live. Turning off auto-pilot and taking the controls back can be extremely empowering.

2. Set clear, but flexible goals

I'm a big believer in flexible goal setting. I like having an idea of what I want to accomplish and in what time frame, without being too hard on myself if I fall short. A year is long enough to make noticeable progress toward — or complete — many goals.

In 2019, my goal has been to save as much money as possible by automating Roth IRA contributions, bringing my lunch to work and not buying new clothes, among other things. I saved around $1,000 more this year than I have in the past, but it's not enough that I would consider this goal accomplished. So I will be rolling it over to next year. See: flexible goal setting!

VIDEO0:5900:59
Suze Orman says this mental shift is the key to saving money

In 2020, I'm going to tweak my strategy to focus on maxing out my Roth IRA. I like a Roth account because the money grows tax-free, and I can use it as back-up emergency savings if I absolutely need to. That gives me more peace of mind if my liquid savings goal is falling short, as it has been this year. And if I keep it invested, I can benefit from years and years of compounded growth.

To get there, I'm planning to automatically invest $500 per month into my Roth IRA. While that can be difficult in New York City on a journalist's salary, there are plenty of categories where I can save more than I am right now — food and dining out being the biggest. Plus, this is probably the best position I'll ever be in to save, since I don't have major financial responsibilities, like kids or a mortgage, and I have a relatively stable job. I'm mindful of these privileges, and I don't want to squander them.

I'd also like to increase my eco-consciousness and improve my consumption habits. As I wrote in an article about my no-spend summer, practicing sustainable habits, such as eliminating food waste and reliance on plastic packaging, isn't just money-friendly, it also feels like a moral imperative for me, so I'd like to buy fewer things in 2020. This goal is less quantifiable than my Roth goal, but I plan to see if I'm succeeding by comparing my expenses each month to the previous year's.

3. Get inspired

A few years ago, I was feeling profoundly uninspired with my finances. I wanted to save more and cut back my spending, but I just wasn't getting what I needed out of my traditional sources for money advice and information. Everything I came across felt a bit dry and stuffy; if I read "make coffee at home" one more time I was going to throw my laptop through a window. I was craving more first-hand accounts from non-experts who were finding realistic strategies that worked in their day-to-day lives.

That's when I dove headfirst into money-related and anti-consumerism subreddits — I love r/Declutter, r/MoneyDiariesACTIVE and r/nobuy — and private personal finance Facebook groups. These communities are filled with questions, tips and resources, and there are countless others out there that offer support and guidance.

Lately, r/MakeupRehab, billed as a "support group" for users who want to cut their makeup and skincare spending, has been my go-to for no-spend inspiration. I don't have a problem with my makeup spending specifically, but the conversations happening on the sub's threads are applicable to any range of shopping habits, and almost every commenter is supportive and positive.

These niche communities are especially helpful because everyone is there because they want to be. They are all-in on the mission of the group, which isn't the case in a lot of comment threads or on other social media sites

These niche communities are especially helpful because everyone is there because they want to be. They are all-in on the mission of the group, which isn't the case in a lot of comment threads or on other social media sites, such as Twitter. That makes the conversation much more valuable and affirming.

For inspiration beyond Reddit, I also keep coming back to one bit of advice Dana Marineau, VP and financial advocate at Credit Karma, gave me back in July: If I want to buy something, I should ask myself if I could afford to buy it twice with the money I have now. If I can't, then I need to rethink things.

4. Write everything down

I'm the type of person who tracks everything in writing: Books read, to-do lists, workouts, things I'd like to buy, and on and on. But it's especially important track your finances. Metrics and trends help us see where our money is going, and writing out goals and why they are important can help us accomplish them.

Writing everything down, whether that's my savings account balance or the way I'm feeling about my spending, helps me get my head on straight when I start overthinking my financial obligations. Money can be overwhelming: There are so many competing goals, so many impossibly high numbers financial experts say we should hit. Thinking about it all in the abstract can be panic-inducing, while writing about it helps me gain perspective.

This summer, there were a few months when I was stressed about the amount I was saving and spending, and I constantly compared myself to other people. But taking a few minutes to write out where I am, where I'd like to be and how I might get there calms the voices in my head telling me I'm behind, or that I'll never get where I "need" to be.

I use an Excel sheet to track my spending and savings and occasionally write down money goals in my journal. But for 2020, I'm using a designated money journal to write out goals, make observations about spending and track where I'm at with my goals. Ideally, I'll write or log something every day, but again, I'm giving myself flexibility here with how often I crack it open.

Another bonus? The journal was a gift, an auspicious start to my year of cutting out superfluous spending. With my 2020 plan etched out, I'm ready to take on a new decade.

Don't miss: I committed to a 'no-spend summer.' Here's how it changed my relationship to money

Like this story? Subscribe to CNBC Make It on YouTube!

VIDEO2:3902:39
I did a 'Cash Diet' for 8 weeks and saved over $1,000
make it

Stay in the loop

Sign Up

About Us

Learn More

Follow Us

CNBC.COM