Guide: Steps to accomplishing your financial goals
Set yourself up for financial success this year!
You can accomplish your financial goals with these helpful tips:
1. Check your credit report and build your credit history
You are entitled to a free credit report every year at annualcreditreport.com. If you find any errors, file a dispute with the credit bureaus. Use your credit card only for purchases that you can pay off in full every month. Using a credit card responsibly will help you build your credit history and increase your credit score. A strong credit score means you will have lower interest rates and payments on any new loans you take out.
MORE: Millennial Money - Now is the time to build your credit
2. Evaluate your starting position
First, figure out where you're at financially. Create a baseline that maps out your spending and saving habits, using statements and other helpful documents from the past couple of years. As you set specific financial resolutions for 2022, this baseline will be a great reference point to see where you can make changes that will help you accomplish your goals.
3. Open a bank account
If you don’t have a bank account, start the new year by opening one that’s safe, affordable and right for your needs.
It can be tempting to set several goals around your finances, like creating and sticking to a budget, paying off debt, or saving up to make a big purchase. However, setting too many goals can be overwhelming and often creates conflicts. Consider which are the highest priority to help direct your efforts toward what you feel is most important in 2021.
5. Establish timelines
Many financial goals are categorized as short-, mid-, and long-term goals. Though mid- and long-term goals are typically longer than one year, they’re perfect to set and start working toward now! No matter what type of financial goal you’ve set for yourself, be sure to establish timelines for them. This can help you better understand the steps you need to take, like how much and how often you should be contributing to your savings, paying bills, and monitoring your spending habits.
6. Monitor your progress
It’s crucial that you regularly monitor your progress. Are you on the right track and making headway on your goals? If your answer is yes, you’re more likely to see success as the year concludes. There are many ways to track how your goal is developing. For example, a budget is a great way to monitor how your spending and saving fluctuates throughout the year. Other options are apps you can download to your phone or trackable spreadsheets specific to your unique goals.
7. Develop and stick to a budget
Start by looking at your credit card and bank statements for the past quarter. If you are spending more than you are earning or aren’t able to save enough, then expenses should be reduced. Budgets are only as good as your ability to stick to them so you must be disciplined about following yours to get your finances in order.
One way to determine how much you can afford to spend is to apply the 50/30/20 rule to your monthly take-home income, according to NerdWallet. The goal of this budget method is to split your money as such: 50% toward needs, 30% toward wants and 20% toward savings and debt repayment. Click here for more tips.
8. Make it fun
Though financial goals can be difficult to achieve at times, they shouldn’t be considered a chore. By adding some fun to your financial resolutions, you’ll be able to look back on them with happiness when the year is finally over. For those who like a challenge, consider trying money-saving challenges. If you’re highly motivated by incentives, come up with a small treat for when you’ve saved a certain amount. If you have a certain hobby that can make you money, consider adding that to your money-earning endeavors so you can enjoy yourself as you save.