Thursday, Oct. 10, 2019 | 2 p.m.
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Boosting your financial well-being is a worthwhile goal, regardless of income level, tax bracket or savings. According to the Consumer Financial Protection Bureau, financial well-being “describes a condition wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future and is able to make choices that allow them to enjoy life.” While strengthening your finances may feel intimidating, committing to small, day-to-day changes and using smart money management techniques can make all the difference. Here are some steps you can take to improve your financial future.
Learn about your finances
The more you know and understand your finances, the easier it is to manage them properly. Learn how to reduce debt, improve your credit and plan for retirement. Educate yourself about account options, the best credit cards for your lifestyle, tax strategies and how to keep your money safe. Whether you want to improve overall financial literacy or find answers to specific questions, there are lots of resources there for your benefit. Many local financial institutions provide in-depth financial counseling services. “We encourage our members to take advantage of free financial counseling, educational programs, savings strategies, as well as other products and services, to develop and maintain financial health,” Cypers said.
Monitor your accounts
Pay close attention to your accounts. Online and mobile banking apps make it simple, allowing for daily income and expenditure tracking. Most of these services allow you to sign up for alerts prompted by different account activities, such as when your balance is low, if you’ve reached a credit limit, when a loan payment is due and more. It is also a great way to check for fraudulent activity and suspicious spending.
Save, save, save
A general rule of thumb is to save at least 10% of your annual income. Set a reasonable savings goal and build that into your monthly budget. If 10% is too much, aim for 4% to 6% instead—whatever you can manage. Small, incremental savings add up, so don’t feel discouraged if you’re unable to save as much as you’d like to right away. Be mindful of your goals before making unnecessary purchases.
Establish a budget
Creating and adhering to a budget is essential to improving finances. “A reasonable, well-planned budget is a guidepost that can inform other financial decisions going forward,” said Nicole Cypers, Vice President of Public Relations at America First Credit Union. “You’ll see how much you have to spend, what you can set aside, identify possible pitfalls and make projections.”
When you set up a budget, it’s important to be thorough and practical. Start by compiling your expenses. Go through your bills and statements from the past 12 months for an accurate spending picture, particularly costs that aren’t fixed, such as utilities and groceries. Break down these figures into monthly, quarterly and annual amounts. From there, tally all of your expenses for the year and divide by 12 for your baseline monthly budget. It’s also smart to add 10% to 15% each month for unexpected expenses. Be realistic about how much you need to live within your means.
There are also tools available to help. “We offer Money Manager, a free online program for linking accounts, tracking spending and gaining intelligent budget advice, among other features,” Cypers said. Online applications automate the process and make it easier to develop a budget that fits your needs.
Know your credit score
Be familiar and proactive with your credit report. It influences your ability to get loans, interest rates, loan terms and whether you’ll even secure financing in the first place. Look up your FICO score every few months and work toward improving your score if you have negative marks, such as late payments or high balances on revolving accounts.