Gaining control of your personal finances seems simple enough. Then, as you factor in emergency expenses, that vacation you want to take and surprise expenses, it’s not so simple. That’s why, when you want to take control, holding yourself accountable is the real challenge.
Like you, more Americans want to commit to better money management, making it a common New Year’s resolution. When Fidelity Investments conducted their 2016 New Year Financial Resolutions Study, they found the number of Americans who plan to save more, spend less, and pay off debt increased to 37% in 2016, compared to 31% the previous year—a 6% jump.
So, whether a New Year’s resolution or part of your Spring “cleaning” plan, it’s important to lay the groundwork for gaining control of your personal finances.
- Get crystal clear on your financial vision. The more specific you can be about what you want to achieve financially, the better. Vague plans to “save more money” excuse you from committing to a precise end goal. For example, maybe the goal is to pay off credit card balances, save $3,000 in cash, and bump retirement savings contributions by 3% each paycheck. Calculate how much that will cost each month and decide if its manageable. Set an achievable timeline to get there and commit to it.
- Expect the unexpected—and sock away enough money to cover contingencies. If a sudden car repair or urgent mid-winter furnace fix would send you reeling without a solution, you’re not alone. Nearly half (46%) of adults say they either could not cover an emergency expense costing $400 (or more), or would have to resort to selling something or borrowing money to come up with the funds, according to a U.S. Federal Reserve report on household economic well-being. Each month, pay yourself first and beef up that savings account. Anything is better than nothing, so decide how much to save and set up automatic transfers to make it seamless.
- Take cues from the experts and check out some financial books. You’ve established a budget and have a plan in place, now you need to stick to it. Take a look at your reading list and make it a priority to add some books on personal finance. Any wisdom you can garner from the experts will change your financial game and set you up for success.
Looking for more tips to firm up your financials? Check out Comenity’s financial resources.