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These 3 steps will help you track where your money is going in 2020

Getting a handle on where your money is going in the new year could be key to alleviating anxiety about paying down debt, increasing savings or dealing with unexpected expenses.

More than three-quarters of U.S. adults are experiencing financial stress, according to a new survey by the National Endowment for Financial Education, yet even among those who've made financial resolutions for 2020, only 4 in 10 of them said setting and following a budget is a top goal.

"Even in a strong economy, more than half of Americans say they're living paycheck to paycheck due to credit card debt, managing housing expenses and dealing with employment struggles," said NEFE president and CEO Billy Hensley. And if a curve ball comes, they may be hard-pressed to dodge it.

Last year 72% of U.S. adults experienced unexpected major expenses or financial setbacks, the NEFE survey found, and they were split between paying for them with cash, credit cards and emergency savings. Bottom line: Few of them had a budget or a plan.

Here are some tips on figuring out where your money has been going and where it should go in the coming year.

1. Know your net worth

The best way to gauge your current financial situation is to know what you own and what you owe. The difference between the two will tell you your net worth.

To determine your net worth, add up all your assets, including cash, retirement accounts, college savings, house, cars, investment properties and valuables, such as art and jewelry. Then subtract from that number what you owe — any liabilities or long-term debt, such as a mortgage or student loans, as well as revolving credit card balances and any other personal loans. Use the Net Worth Worksheet at for an accurate gauge of your financial health.

If your net worth is positive, don't be overly confident. Making sure that it stays that way will take discipline. And if your net worth is negative, don't panic. This is your current situation, but it doesn't have to be your financial future. You may need to work harder on spending less, saving more and paying off debt.

2. Create a simple budget

A budget is really just a list. Yet it's a powerful list that can help you stay focused on your financial goals — whether that is spending more wisely, paying off student loan or credit card debt or saving for emergencies in the short term or retirement in the years ahead.

Start old-school — with pencil and paper — and list the money you had coming in (your income) and the money that went out (your expenses) last month or in the past few months. With the holidays, your spending may have been a little more extreme, so maybe take a look at October, November and December.

Make a list on one sheet of paper of all your income coming in the door every month. Every paycheck you get, a regular side hustle, alimony or child support, as well as income from investments.

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On another piece of paper, start recording your expenses. The hardest part of making a budget can be keeping track of all of your expenses. Start with the big ones: your rent or mortgage, car payments or transportation, child care, utilities, groceries, any debt payments you need to make. Your essential expenses should be at the top of the list.

Next, list nonessential expenses. This should include everything you spend money on that you like but maybe don't need — eating out, entertainment, that new pair of shoes. Treating yourself is great! But you want to keep i within your budget.

And don't forget to set aside some savings for a rainy day. Consider it a necessity to pay yourself first by contributing to savings. You should have this baked right into your budget.

Putting together a budget doesn't have to be difficult. You just have to do it. Check out the monthly budget planner on the National Foundation for Credit Counseling website. There are budgeting apps, such as Mint and Pocketguard, that you can keep on your phone, along with Microsoft Excel and other spreadsheet software that can help. But if you are creating a budget for the first time or drafting a new budget, take the time to write it all out. This will force you to focus more clearly on where your money is going.

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3. Use this strategy to live within your means

To live within your means, you need to stick to a budget. Having a budgeting app, as well as the app for your bank, on your phone may make that easier to accomplish. But those are just tools — you also need a strategy.

If you have a tendency to lose track of every little expense, following what's known as the 60% Solution is a terrific, simple way to budget. More than a decade ago I read a piece by financial journalist Richard Jenkins in which he laid out how he used that strategy, and I adopted it for my own family's finances. Apart from some hiccups every now and then, it's been a great guide.

Here's how it works: Limit your "committed expenses," your essential expenses, to 60% of your gross income. That includes food and clothing, household expenses, insurance premiums, recurring bills (credit card, student loan, car payments) and all taxes (including property and income taxes). If your committed expenses are more than 60% of your income, you're going to need to cut back on some expenses.

Consider starting small with achievable goals so that you do not become discouraged.
Billy Hensley
president and CEO, NEFE

The other 40% of your gross income gets divided into four parts: 10% for retirement savings, 10% for long-term savings (for a down payment for a home or college savings — it's money you won't likely need for several years), 10% for short-term savings (for emergency savings and irregular expenses) and 10% for "fun money." The last is anything you want to actually spend your money on: travel, entertainment, eating out, etc.

Sticking to the 60% Solution may not work for everyone, but it gives you a number, a target. You may not hit it right away, but it's a start.

"Consider starting small with achievable goals so that you do not become discouraged," said NEFE's Billy Hensley.

That's what it takes to get your finances on track for the new year. Start by knowing where your money went in 2019, and set yourself up with a realistic budget so you know where you are headed for 2020.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.