The 2022 TIAA Financial Wellness Survey showed that only 22% of people ages 18+ gave themselves a high score of financial wellness. That means that over 70% of people are not confident in their financial status, and in a world of high gas prices and increasing grocery costs saving money can seem like an impossible task. Improving your financial status does not happen overnight and it is never too late to start. It requires baby steps and an abundance of patience, but comfort in your finances is well worth it. We have compiled a list of ways to get you on track to improving your finances so you can decide what best suits your lifestyle and get the ball rolling.
What are your goals and how will finances help you get there?
Break it down. Where do you want to see yourself in 5 years? 10 years? If you want that dreamy vacation home that you drive to in a Tesla, you might need to start saving now. It’s important to know where you want to be to know how you need to get there. When you get in the car to go somewhere do you say, “I’ll just drive, and I may eventually reach my destination?” No. Before you turn the car on you decide your destination and determine which route will get you there. Notice I said to determine which route will get you there. There may be more than one way to reach your goal, but it is up to you to decide which is achievable for your lifestyle. Set yourself up for success.
How can a budget help you achieve your goals?
Arguably the most important step in improving your finances that everyone from college graduates to CEOs should continually practice is budgeting. You need to know what you’re bringing in, so you can know what you’re able to give back out. If you’re bringing in $1,000/month and your monthly expenses total $800, then you SHOULD have $200 leftover, correct? So, what do you do with that $200? It can be easy to overlook a couple of Starbucks coffees, or that $10/month gym membership that you still pay for but don’t use, but these small expenses add up quickly. When determining your budget, don’t just include your large bills like student loans, mortgage payments, car payments, etc. Be sure to include a budget for weekly groceries, gas, and any streaming services you have (Netflix, Hulu, HBO Max, etc.). At this point, you will determine your net income after expenses and ideally, this money should go into a savings account. Simply google, ‘free budgeting sheets,’ or check out budgeting apps that can be downloaded straight to your phone to keep yourself on track.
Once you have a budget, where do you put your extra earnings?
Your savings account should ideally be made up of your leftover income after your monthly expenses which will accumulate over time. Even if you can save $10/week, that is $40/month which is $480/year. Your savings should be used for emergencies only. This may prove to be a hard task for some but keep yourself honest. This is not to say you can’t treat yourself occasionally, but don’t make it a habit to buy the new mascara that TikTok says you need to have. On top of a savings account, you should take advantage of setting up a retirement account if you have the ability. Do not put off signing up for that 401(k) because before you know it, it’s 20 years later and you still haven’t started saving. Try setting yourself a goal every couple of years to add a percentage of your income to your 401(k) account. You won’t regret it!
How could contacting a financial advisor help you?
Speaking to a financial advisor is generally free. They can help analyze your income vs. your expenses and give you an achievable goal in setting yourself up for future success. They may have tools you can take advantage of, and sometimes having someone hold you accountable is just what’s needed. A financial advisor can also help you prepare for the future. Things like inflation, market declines, and health care can change on a dime, and being prepared can keep your finances from declining during these times.
An increase at work shouldn’t equal an increase in spending, remain frugal wherever possible.
You may be lucky enough to come across a lump sum of money or a pay increase but be wise about your extra earnings. Just because you have it does not mean you need to spend it. Continue your savings and try to avoid adding more debt into your equation. Don’t adapt to a lifestyle that you may not always be privy to. As we have all seen, life can change in an instant. You might get let go from your job, and now you’re buried in a life that you can no longer afford. Putting your savings first can save you heartache in the long run.
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