Every 1st of January, when the clock strikes 12 at midnight, what is the first thing you think about? Most would say wishing everyone a happy new year. Of course! But what’s the second or third thought? Planning how you want to lead the new year and set goals. While some might be fairly ambitious, some can be realistic too!
Everyone has to take stock of their actions, decisions and plans made in the previous year to understand what worked and what needs to be changed. These could range right from personal goals like planning an international trip to professional goals such as receiving a promotion by year-end. But the plan that all these goals derive is how strong a financial plan you built in the last year.
Related Read: How I Raised My Credit Score by 250 Points
Financial plans are dynamic and they need to adapt to the new situations and requirements that you shall lay. Here are a few goals you can place across 2020 which is not only a new year but also a new decade!
Goal #1: Catch up with your credit history
Your credit history will tell you how high above or deep into the water you are. It enlists all your financial transactions and also exhibits the factors that raised or reduced your credit score in the last year. In addition to that, check your personal details and KYC information in case there has been a change in the previous year. Wrong information can also hamper your credit score and we don’t want that to be the case!
Goal #2: Take stock of last year’s credit lines, transactions etc.
While you are looking at your credit report, evaluate the lines of credit you picked up and how you did in repaying them. The mix of credit lines you pick is an important factor accounting for your credit score. So make sure you branch out with the kind of loans you pick to ensure that you have used the right type of loans when needed. If there were any defaults or late payments, they would’ve affected your credit score. So, make a promise to stay at the top of your repayment game in 2020.
Goal #3: Pay all your bills on time and lay a plan to reduce your credit debt
If you have faulty credit card due clearances or late loan EMI payments, list the reasons behind them both, real and hypothetical. Evaluate how you should avoid the real reasons from recurring and be prepared to deal with the hypothetical ones in advance. Every faulty payment reflects on your credit report for 7 years, so make sure you don’t get late in paying your credit card dues and loan EMIs this year.
Also, start planning on how to reduce the number of credit lines you pick in a year. The last thing you want is to display a credit hungry behaviour! So, make a list and take stock of those credit lines which you could’ve avoided. Try to abide by this in 2020!
Goal #4: Apply for credit only when absolutely needed & stick to a monthly spending limit
You may have received a credit card with handsome credit limits but that doesn’t mean that you can use all of it, especially when you cannot afford to repay the entire due on time. Keep a few points in mind when you get a new credit card! Plan your savings and put a cap on your monthly expenses. This will help you plan ahead and save up for any emergency expenses. Avoid picking up credit to repay another line of credit, pick it up only when absolutely necessary.
Goal #5: Save up on emergency funds
Emergency funds are underrated. It may seem like an extra amount getting blocked from your monthly income amidst all the dues and EMIs, but having an emergency fund is very important for everyone. Right from health needs to emergency travels, you should be prepared for everything in advance. So, invest in an emergency fund and build it judiciously.
These 5 goals will help you ace your finances in 2020, so make sure you keep a stellar credit history and take measures to maintain it every year.
Want to lay down such goals? Begin by checking your CRIF Credit Score now.