I used to think New Year's resolutions were cheesy until setting 3 helped me double my income and save nearly $30,000
Courtesy of Elizabeth Aldrich
- In 2019, I set money resolutions for the first time in my life. I wanted to save more, boost my income, and start investing.
- I almost doubled my income as a freelancer, and I did build up a generous emergency fund, although I didn't quite hit my original savings goal.
- In the final month of 2019, I finally took the plunge and started investing. I chose Betterment to invest for short-term goals, like a portion of my emergency fund, and Vanguard for long-term goals, like retirement.
- Start investing with Betterment today and reach your financial goals in 2020 »
I used to scoff at New Year's resolutions. My least favorite type of resolutions were anything related to fitness or money. But as 2018 turned a corner into 2019, I felt myself experiencing a change of heart.I'd recently paid off all my debt and gotten to a place of relative stability in my freelancing career. I even had some money saved up for the first time. Suddenly, I could see a whole world of financial freedom - one in which I could buy things that I value without going into debt, invest in opportunities for my future, and even save for retirement - come into focus on the horizon. Advertisement
I realized that I never set money goals because I never believed they were possible for me to achieve, and now that I'd hit some big financial milestones, I finally felt like I had a chance.
So, in January of 2019, I set financial New Year's resolutions for the first time in my life: I wanted to increase my income, build a healthy emergency fund, and start investing. Here's how it went.
I nearly doubled my incomeI quit my job to travel in 2015 and started freelance writing in early 2016. The first couple of years were rough, but I was excited in 2018 when my freelancing income finally reached what I'd been making at my old full-time job: $40,000 per year. After that, I set a goal for 2019: to make significantly more than what I was making in my old job.
In the end, I nearly doubled the income from my previous job as a freelancer. In 2019, I made about $75,000 before taxes. This is more than I ever could've made by now in my old job, considering a typical raise was around 3%. In four years, I've achieved a raise of almost 100% through self-employment. This solidified my hope that a career change would increase my income potential.
I fell short of my savings goal but still built a one-year emergency fund and a "self-investment" fundAt the beginning of 2019, I started with $13,000 saved in an emergency fund, most of which came from a $10,000 inheritance I received when my grandfather died. It felt good to finally have some money in my high-yield savings account and not have to worry that something as simple as a car repair would put me into debt.That feeling I got from seeing my savings account grow only motivated me to kick my savings habit into overdrive. I wanted to beef up my emergency fund a bit, since self-employment means my income fluctuates from month to month. But I also wanted to save for things like additional schooling, retirement, and investment opportunities.Advertisement
I set a stretch goal for myself: to have $50,000 in my savings account by the end of 2019. I knew it was a long shot, and I didn't quite hit it. But I did get to $40,000 in savings.
I set up automatic deposits into my savings account of $3,000 per month for the first nine months of the year to reach that goal. I canceled the automatic deposits in October because my partner finally got enough time off work to go on a long trip to Europe, and we wanted to spend that money traveling for five weeks since he rarely gets time off.I probably would've reached $50,000 if I hadn't spent five weeks in Europe this fall, but I've decided not to beat myself up about falling short of my goal because that trip was well worth the money. I still saved more money than I thought I could.Advertisement
I took the plunge and started investing
My final goal was to start investing, something that has always made me nervous. I didn't take the plunge until the last month of 2019, but it finally happened.
Since my emergency savings is in a high-yield savings account with Betterment, I decided to open an investment account with Betterment to invest a portion of my emergency fund. I chose to invest 50% in bonds and 50% in stocks for some added security, since stocks are riskier and I might need to draw on this money in the event of an emergency.Start investing with Betterment today and reach your financial goals in 2020 »Advertisement
Then, I wanted to invest another $10,000 of what I'd saved into a retirement fund. I went with index funds at Vanguard and followed the three-fund portfolio strategy, with the great majority of those funds invested in stocks since they're being saved for a long-term goal.
My financial resolutions for 2020
For 2020, my financial goals involve doubling down on my savings and investment plan with a focus on building my retirement fund. I do feel behind on that given that I'm 30 and just now getting started, but luckily, it's never too late.I also want to rebuild my emergency fund immediately, as I had to take a few thousand dollars out of it when my car's transmission died right before the holidays. So I'll prioritize that before I funnel my savings into investing.Advertisement
Finally, I want to set a stretch goal for my income: hit the six-figure mark. I don't know if it'll be possible, but I like to set goals for myself that go a little past what I think I can achieve. It's like that old saying - shoot for the moon, and if you miss, you'll still land among the stars.While I don't always meet my money goals, I realize that's just a part of life. We can't plan for everything. But having a plan does make goals I once thought were impossible come to fruition.
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Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team.
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