If you don’t have a financial plan, that question may be hard to answer. To achieve financial wellness, you need to define your goals and set a time frame for reaching them. The following steps can help you take control of your finances.
Do you have a good budget?
A good place to start would be with a budget. Tracking your expenses can help you determine how much money you have coming in each month and how much you’re paying out toward bills and other expenses. It will also help you to see where you can cut back on spending.
Budget can be hard to achieve, it’s important to evaluate your approach to budgeting. Before beating yourself up for not meeting your goals, learn how to make budgeting a reality for you.
Would you be able to pay for an unexpected expense, such as a car repair, broken appliance, or medical emergency? If you don’t have an emergency fund, you might be forced to pay the bill with expensive credit card debt. You should try to keep three to six months’ worth of living expenses in your emergency fund. Learn everything you need to know about build emergency fund.
Are you protecting your credit?
Each year, you’re entitled to a copy of your credit report at no cost from each of the three major credit reporting companies — Experian, Equifax, and TransUnion. It’s a good idea not only to periodically check your reports for errors but also to get your credit score. Paying bills on time and staying within your credit limits can help you boost your credit score. Knowing what made up of credit score and how it can affect your score can help you achieve a higher score.
Saving enough for a comfortable retirement is probably one of your long-term goals. But if you have kids, you may put that goal on the back burner to save for college expenses. Remember, funding your retirement is up to you. Your child can use student loans or work part-time to help pay for college. Participating in your retirement plan helps you put saving for retirement first. Any “extra” money you have left can go toward college savings.
How often do you review and re-evaluate your financial plan?
Establishing a financial plan is only the first step toward achieving financial wellness. Make sure you review your plan on a regular basis to make sure you’re still on track to reaching your goals. A financial plan must be based on your current income and expenses, a yearly review is recommended to evaluate your changes and progress made towards your goals.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.