UNITED STATES—Have you been battling financial difficulties, but want 2020 to be a better year for you and your family? 2020 can be a better year if you follow the right path to financial management and are prepared for tough times should you encounter them. Maybe your goal this upcoming year is to eliminate or greatly reduce debt and get one step closer to financial freedom. Maybe you want to build enough savings to pay for a repair or make an upgrade to your home. The four keys to meeting your financial goals are budgeting, saving, spending and borrowing only when necessary.

Aspects of Budgeting

Everyone who wants to become successful financially should know how to budget. Budgeting is simply a system for making sure you know what your weekly, monthly and annual take home pay is. and then allocating it towards savings and expenditures. There are many kinds of budgeting strategies that take different percentages of your income and help you set it aside for both essential and non-essential expenses. But the main idea is to make sure you can afford your most important expenses which would be your home, your transportation, food and clothing, and utilities and other critical items. By keeping track of all your expenses, you can eliminate ones that you don’t need and put more savings in your own pocket.

How To Start Saving

A savings fund is important because you can make purchases with the funds you have on hand, instead of incurring debt via credit cards or other means to buy things. Also, if you were to run into an unexpected situation such as a car or home repair that couldn’t wait, having savings available makes it much easier to pay for those. So how much should you be setting aside each paycheck for savings? You should consider what you’re hoping to save for as a long-term non-essential purchase, and what you plan to set aside for emergencies. Regular savings are pretty much up to you to decide whether you’re going to spend right away or put in an investment account. You should have at least $1,000 set aside in a savings account that you don’t touch until you become faced with an emergency.

Make Sure You Closely Monitor Spending

To spend responsibly, you will need to be disciplined enough to know which expenses are necessary and which are novelty purchases. Debt isn’t always caused by large purchases like a new car or luxurious vacation—it’s often the little things that add up. Consider the cost of eating out a few times a week, buying small add-ons to gaming systems, and other small expenses you might not count on adding up. Spending monitoring effectively goes alongside budgeting, and some budgeting app even alert you when your spending is reaching levels that it shouldn’t.

Borrowing Money When Necessary

There are times when borrowing may make sense, especially if your savings aren’t enough to cover an unexpected emergency. Part of a well-balanced understanding of money is how to borrow without hurting your long-term financial goals. Circumstances might dictate when you need to borrow money – but you can make informed, educated decisions if you have all the information. Should you encounter an unexpected personal emergency and need short-term financial assistance, you should know what types of options are available as well as the companies that lend money. For example, make sure you understand the difference between a credit card and a line of credit online.

The bottom line is you can avoid unnecessary financial pitfalls if you go into 2020 equipped with the basics of budgeting, saving, spending and borrowing. Borrowing can be one of the trickiest areas to master because you need to know what you’ll be paying in interest and what the potential ramifications could be if you run into trouble paying debt. But with a little bit of homework and using the right knowledge center, you can become adept at keeping your money safe.