Budgeting is arguably the most important part of getting healthy financially. Without a budget, it’s nearly impossible to track what you’re spending. Setting up a budget might sound overwhelming at first, but once you get the hang of sticking to your budget, it can move mountains.
- Set up a monthly budget that works for you and stick to it.
- Budget with your partner (or other responsible family members) so you’re in agreement. §Reduce your spending in targeted categories each month, such as clothing, home decor, or dining out.
- Track everything you spend. Using an Excel worksheet can be really helpful!
Get out of Debt.
Another key to financial success paying off debt-will allow you to take full control of your money. No one wants debt looming overhead forever, so instead of ignoring it or just paying the minimum balance and accumulating interest, get serious about becoming debt-free. Paying off debt may feel uncomfortable in the short-term, but in the long-term you will have greater financial freedom and flexibility.
Tips for Becoming Debt-Free:
- Set up a debt payment plan that works for you.
- Reduce spending to pay off debt.
- Stick to a strict budget.
- Prioritize future goals over instant gratification.
- Don’t add more debt.
Start Saving Money.
The rule of thumb is to save 10% of your monthly income (e.g., if you make $2,500 per month, that’s $250 that needs to go to your savings). Saving this extra money will add up quickly and make a huge impact overtime. If you can afford it, saving this 10% in addition to your retirement contributions is ideal.
If you are struggling to find ways to save, consider cutting back on your expenses . Sacrificing a few carryout orders or a couple bottles of wine per month is a small ask for attaining financial stability. By establishing healthy savings habits now, you’ll open doors for yourself in the future.
Tips to Help You Save:
- Start with smaller short-term financial goals and work toward larger goals.
- Reduce your grocery bill.
- Limit carryout.
- Reduce utility costs.
- Stick to your monthly savings goal, even if that means tracking every penny spent.
SOURCE: Asset Health; “Five Financial Goals for the New Year,” Miriam Caldwell, thebalance.com, May 15, 2020.”