Most of us want to be in better shape financially, but with so much personal finance advice out there, figuring out where to start can be challenging.
No matter where you are in your financial journey, here are a few easy steps you can take to improve your financial health and your overall state of financial wellness:
1. Measure Your Cash Flow. You most likely know how much you make every month, but how much do you spend, and on what? Once you see where your dollars are going, dive into creating budgets for each category. Knowing exactly where your money is going will help you decide what is really important to you. It’s easier to say “No” to some things, like drinks after work, when you can focus on the “Yes” you’re working toward—like being able to travel or being debt-free.
2. Grow Your Emergency Fund. It’s OK to start small—the most important thing is to get in the habit of saving, even if it’s only $25 or $50 dollars a month. Begin with a reasonable goal, say $500. Once you’ve hit your goal, aim for a month’s worth of living expenses, and then work your way up to 3-6 months. Automate your contributions so you don’t even have to think about it.
Hint: An easy way to jumpstart your emergency fund is by contributing a chunk of your tax refund!
3. Use Technology Tools. There are many tech tools out there that can help you with saving and budgeting. Some may even be available to you through your employee benefits. A good, holistic technology tool will help you categorize your spending and generate monthly budgets, as well as provide you with helpful articles and give you access to your own personal financial advisor.
4. Keep An Eye On Your Credit Score. When it comes to monitoring your credit score, CreditKarma is an easy one-stop shop. It allows you to see where you stand, where your debt is distributed, and which factors you should be most concerned with. Checking in on your credit a couple of times a month is best practice for monitoring security and maintaining your score.
5. Pay Off Debt. Ideally, pay any outstanding credit card balance in full every month. Work towards that goal by paying the most you can to the card with the highest interest rate and making at least the minimum (and more if you can) on the rest. Once you get that one paid off, move on to the next one. Having even a small emergency fund lets you avoid racking up expensive credit card debt when something goes wrong.
6. Contribute to Your Retirement Plan. Especially if your employer contributes too. Retirement plan contributions help reduce your tax burden—the money you contribute is considered ‘tax-deferred,’ which reduces your gross income for tax purposes. You defer paying taxes on your contributions and it grows tax-free too.
7. Ask For Help. Have questions? Need help setting up a spending plan? Talk to your employer about implementing a financial wellness tool like Questis.