5 Things You Can Do Before 2020
Transcript:
What's up Internet? My name's Ian Bloom. Welcome to Nerd Finance! I'm your resident financial life planner and huge nerd. In today's video we're going to be talking about five things you can do financially before 2020 to set yourself up.
The first thing you can do financially before 2020 is start tracking your expenses. Making financial progress if you aren't aware of what you're spending is incredibly difficult. Saving more comes back to cash flow, investing comes back to cash flow, being able to go out and do the things that you want to do with your money that comes back to cash flow too.
The second thing you can do financially before 2020 is set up an automatic draft from your checking account to your savings account for any amount of money you can consistently save. Then, make it a goal to not touch that money. If you don't already have this sort of system set up where you're automatically saving money on a monthly basis, you may find that it's really really hard to save and this is a very, very easy step that you can do just to make sure that you're saving and paying yourself first.
The next three tips are things that you can do financially before 2020 that involve some sort of taxable impact or making use of a benefit that you may not know you have access to. If you are within the income thresholds, contributing to IRAs is a great thing to do before 2020 and that's step three. IRAs are a way to set aside money for yourself for the future with some tax benefits now. Traditional IRAs give you a tax cut today, but make you pay the taxes later on. Roth IRAs don't give you a tax break today, but don't make you pay the taxes on the investment gains in the future. So whichever one you choose is going to be based on what's right for you.
The fourth thing you could do financially to set yourself up for 2020 is contribute to an HSA if you have one. People use HSAs when they have them usually, as just a way to get a tax break on the money that they're going to spend on medical expenses. But, HSA dollars are actually carried over year to year and can be used for any future medical expenses that are qualifying. This can be very very useful later on in retirement and you get a tax break today, so if it works for you and you have an HSA go ahead and contribute to it.
Finally, the fifth thing that I think you can do before 2020 is just go ahead and increase your 401(k) or similar retirement plan contribution by 1%. You won't notice this on a paycheck to paycheck basis because it's going to be a small percentage of your earned income. But, if you were to do this every year you would be saving a significant amount of money, probably the maximum in no time. Just keep in mind that ratcheting it up that extra 1% won't hurt you in most cases financially, but will make a difference in the long run for future you.
Before we close, I want to make it clear that all of these tips are things that you should consider with a professional. So, whether that's me or some other financial advisor or planner out there, make sure that whatever tip you choose to follow is something that works well for you. This is financial education, not financial advice. Thanks so much, I hope you enjoyed watching this video! Like, comment, and subscribe obviously or check out my website for more information like my book. I hope you have a wonderful day! Thanks for watching!