Five Ways to Get Your Finances on Track
November 4, 2021
Your financial situation includes a combination of your income, expenses, and debt as well as your goals and dreams. To achieve financial wellness, you should have a plan which will help reduce stress and allow you to be more productive. To set yourself up for success, consider following these five steps to improve your financial well-being.
1. Track your spending
To become financially healthy, begin with a budget. Creating a household budget helps you track spending, and it then becomes clearer where your money is going and where you may need to adjust your spending to achieve your financial goals.
2. Plan ahead
Being financially fit also includes incorporating your financial goals into your budget. Your goals may include paying off high-interest debt or saving for a down payment for a home purchase. Adding an emergency fund to your savings goals will help you cover unplanned expenses, such as car and home repairs. This fund can also help you maintain your budget and avoid future debt.
3. Know your credit history
Another step to take toward a healthy financial lifestyle is to understand your credit history, including knowing your credit score. A credit score predicts how likely you are to pay back a loan on time. Most credit scores range from 300 to 850. Usually, consumers with higher scores have an easier time qualifying for loans and may receive better interest rates. You may be able to obtain your credit score from your financial institution.
Reviewing your credit report, a statement about your credit activity and current credit situation, is another way to understand your credit history. Your credit report contains information about your loan payment history and the status of your credit accounts.
Visit AnnualCreditReport.com to get a free copy of your credit report annually from each of the three major credit reporting bureaus — Equifax, Experian, and TransUnion. It is recommended to check your credit report three times a year (once every four months). Once you review it, report any discrepancies to the credit bureau.
4. Build savings habits
Another key component of financial fitness is establishing a realistic savings plan for each of your goals. To make it easier, set up automatic transfers to subsaver accounts — separate accounts within your main savings account — established for each goal. And don’t forget to start and add to your retirement account.
5. Educate yourself
Take it upon yourself to learn about financial topics. To learn more about investing, credit, paying off debt, and savings strategies, look for educational opportunities offered by your financial institution and online reputable sources.
It is always a good idea to understand where you are financially so you can keep things on track. Use these steps as a guide to get started on your financial journey and achieve your goals.
Tags: Money Management, Budgeting, Savings