Mortgages, car payments, family financial obligations and more money woes could make it seem dauntingly impossible to create a secure financial future any time soon. The average American has $3,600 in credit card debt alone, reports USA Today, with average household credit card debt rising 10 percent in just three years.
The encouraging news is, if you want solid finances, you’re off to a great start, no matter where you are in your savings journey. Committing to saving and growing your wealth is an essential positive step to making it a reality. Here are five ways to get on track to achieve your financial goals:
1. Evaluate Where You Are
You may not have a budget, but do you even have a solid grasp on your income? Download a free money-tracking app like Mint or Goodbudget to your smartphone. Link up your bank accounts so that income and credit card spending are automatically pulled in, and apply your investment portfolio if you have one.
With what you have left, set up ideal budgets you want to have for categories like groceries and entertainment. Use those figures to guide your spending, and aim to underestimate what you have to spend. Spend even less than than amount so you can put more into savings.
2. Start Saving Now
It doesn’t matter if you save $500 a week or $5 a week — anything saved is positive. MyMoney.Gov suggests taking whatever money you earn, and paying yourself first in a savings account before you spend anything. The following situations make having a significant savings account so valuable:
- You lose your job, and it takes several weeks or months to secure a new one
- You or someone in your family has an unexpected accident or illness
- Your car requires expensive repairs
Large future expenses, such as a home purchase, a long vacation or child’s college tuition, should also be saved for. By making sure to put away money in an emergency fund, you can be better prepared for whatever comes your way.
3. Eye Retirement
It is not guaranteed that you’ll be able to work the same amount of hours at the same job making the same amount of money as you are now for as long as you want. How much you should be saving depends on your current income and goals after retirement. If you want to travel the world or move to a more expensive area, keep in mind you might want to have more than average saved.
CNBC recommends to save at least as much as your current salary by age 35, and to have saved at least five times your salary by age 55. Using your company’s 401k matching program, or investing funds into an IRA or Roth IRA retirement account, helps you grow your money for retirement.
4. Spend Wisely
The best way to prevent credit card debt is to only spend what you have and to prioritize saving over spending. Aim to find ways to have fun that are free or cost little. Instead of going to a bar with friends, go for a run outside with them. Look for free concerts or events in town. Practice a hobby like gardening or drawing.
For big purchases such as cars or furniture, look for deals on used goods that are aesthetically pleasing to you and that function well. This applies to electronics, like smartphones, as well. For example, T-Mobile offers affordable monthly plans for the Apple iPhone 7. If you do want to make a significant purchase, think it over for a day before committing to it. You could also look at expenses not in dollar amounts, but by the amount of time you will have had to work in order to purchase it. If it’s still worth it, make the purchase.
5. Invest in a Financial Planner
Sometimes to grow your money, spending money by investing in professional financial planning is the way to go. According to financial planner Stone Steps Financial, a one-time meeting with a financial planner for one to two hours typically ranges between $400 to $600.
Considering a meeting like this may reveal to you poor investments you’re making, or glaring budgeting mistakes you’re adhering to, talking with a professional can give you the confidence you need to get on the right financial path. Be sure to hire a certified financial planner, since they’ll have up-to-date licensing and will adhere to regulations that protect your best interests.
As you work through all these steps to boost your finances, share your goals with your partner, best friend or a loved one. Getting advice on what has worked for them, and getting support when you say “no” to that expensive meal, will help you achieve what you want.