Getting yourself organized financially not only feels good, but it also puts you in a better position to achieve your long-term goals. But we get it—life is busy, and it can often be difficult to find the time to tackle things that fall outside of our normal day-to-day routine. Luckily, with stay-at-home orders still in effect for many states and counties, now is the perfect time to work through more than just your Netflix queue, and start focusing on your financial wellness.
Here are ten things you can do today to set yourself on a better course financially:
- Know Where You Stand
Checking your credit score, making sure you know where to find your financial accounts—and all of their balances—and evaluating your spending habits for the past several months can give you insight into how financially organized you are currently, and help you determine where you may want to make some changes. Free online tools like this one: Emergency Planning Tool not only make it easier to aggregate that information but also provide visibility and transparency into your progress as you take steps to make improvements.
- Check-in with Yourself
Has your income changed? How about your debt? Are you able to save more or less than you were previously? Now is a great time to reaffirm, reprioritize, and redefine your financial goals, and take stock of your ability (realistically) to achieve them, based on your current scenario.
- Set a Budget
It’s financial wellness 101—save more, spend less. Research has found that this very basic tenant of money management is key to accumulating wealth over time. Two billionaire examples? Mark Zuckerberg shops at Costco and Warren Buffet still lives in the same home he bought in 1958. Setting and sticking to a budget, living below your means, and saving for large purchases well ahead of time gives you freedom from your paycheck and better positions you to achieve long-term financial wellness.
- Work to Reduce Existing Debt
Debt is like a weight that keeps you from getting ahead and enjoying financial freedom, especially when it’s high interest-bearing. But getting out of debt is possible with a bit of planning and discipline. Try:
- The Snowball Method: Pay minimums on all balances except the smallest balance regardless of interest rate; once the smallest debt is paid off, move to the next smallest debt, creating a “snowball” effect until all of your debt is clear. OR
- The Avalanche Method: Pay down the debt with the highest interest rate most aggressively while paying minimums on your other accounts; the goal is to create an “avalanche” effect, saving you money over time in reduced interest.
- Don’t Forget to Pay Yourself, Too
If you haven’t accounted for contributions toward your retirement or other savings and investment vehicles in your budget, make sure you do so. In fact, many believe that should be your first payment each month to ensure your long-term goals stay on track, ahead of expenses and discretionary spending. Even if you’re unable to make significant investments right now, start small with a plan to increase contributions over time (especially as you reduce your debt and stick with that budget you’ve defined above 👍).
- Build Your Emergency Fund
If you think you don’t need a “rainy day” fund, think again. No matter your age, income level, or expenses, having a reserve stash of funds to carry you through an unexpected financial setback is a prudent way to 1). Fund your expenses without incurring additional credit card or loan debt 2). Avoid tapping into existing accounts, like retirement, that could set you back years, and 3). Reduce the stress that often accompanies an unexpected hardship. If you’re not sure how much you need to save or how to get started, start here.
- Evaluate Your Insurance Coverage
Do you have policies in place to protect your assets if something were to happen to you? While it’s not pleasant to think about, insurance is essential to financial wellness because it helps safeguard you and your loved ones during an otherwise unpleasant time. There are many different types of coverage available to you, contact us, and we’ll discuss securing the best policies for your needs.
- Do Things You May Have Been Putting off, Like Building a Will
File this one under “Things that may be unpleasant to think about but are essential to your financial wellness.” According to a recent survey, only 32 percent of adults have a will or other documentation outlining their wishes for their estate (aka, anything and everything they own). If you’ve been avoiding this important task, now’s the time to make it happen. And while you’re at it, make sure your insurance and investment account beneficiaries are also up-to-date.
- Watch for Financial Scams
You should always be prepared to protect yourself against financial scams and identity theft, but the coronavirus pandemic has given individuals new reasons to keep a watchful eye on their financial accounts. According to reports, scamming is on the rise, so take precautions, such as using strong and unique passwords, particularly for financial accounts, and pay close attention to your account activity. Most importantly, NEVER share your personal or financial data with a source you can’t be sure is reputable and secure.
- Check-in with Financial Service Providers
If you’ve been considering the benefits of working with a financial professional, now may be the right time to take that step. Not only can professional financial advisors help you get your financial life organized, but they can also put you on a path toward financial wellness and work with you to create a plan to achieve your long-term financial goals.
Interested in learning more? Get in touch with our team to discuss your financial goals, and learn how Third Tier Wealth Management can help you achieve them. Schedule a brief 20-minute call to see how we can help here: Contact Us