Improving your financial health doesn’t have to be complicated. In fact, it often isn’t. It’s the seemingly small and simple actions, consistently taken over time, that have the biggest impact. To that end, here are seven simple things you can do right now to pave the way to financial success for years to come.
1. Build a financial plan … and stick to it!
Tops on our list is building and sticking to a financial plan. Is anybody surprised that we put that #1 on our list?! Yeah, we thought not.
But what exactly is a financial plan, and why does it help? A financial plan is a snapshot of your current financial situation along with—you guessed it—plans, for your financial future. Most importantly, a financial plan provides you with actionable steps to achieve your desired financial outcomes, like your target retirement age and lifestyle, among other things.
We commonly hear some version of, “but isn’t financial planning just something people with a bunch of money do?” Thankfully, the answer is an emphatic “no!” The nature of financial planning is changing. No longer is it a drawn out, complicated, and expensive process. Advances in technology have empowered the people who need financial plans the most with robust tools to plan for their financial futures.
At Savology, we’re proud of the work we’ve done to bring sophisticated, and accessible, financial planning to everyone. Check out what we’re up to, we’re confident you’re going to like it.
2. Avoid keeping up with the Joneses
Comparing yourself to others or trying to impress people by spending money you don’t have is a sure way to rack up debt and derail your retirement plans or other financial goals. If you find yourself giving in to social financial pressures, follow our tried-and-true advice … stop it!
You can avoid becoming a prisoner of the moment by keeping your end goals in mind. Knowing what you are working towards will provide the proper perspective as you face mounting pressure to spend, and other difficult financial decisions.
3. Split your paycheck between multiple accounts
One great way to reach your financial goals is to have your employer set up your direct deposit so that your paycheck is split into multiple accounts. For example, you could have 85% of your paycheck deposited directly into your checking account, 10% deposited to a dedicated savings account to build up your emergency fund, and 5% going into a retirement account.
Once you’ve reached certain goals, you can then adjust the percentages and accounts to tackle your next goals. This approach is a great way to put money away towards your most important goals before you are tempted to spend it impulsively.
If this sounds complicated, it’s not! This is a common request that employers should easily be able to accommodate.
4. Create multiple sources of income
Why settle for a single source of income? Generating passive income through a side hustle (or two or three) is a great way to accelerate your progress toward your financial goals.
Easier said than done? Well, yes, but that doesn’t mean it’s not doable! Ask around. Our guess is that you’ll be surprised at how many people you know have some sort of passive income supplementing their primary income.
Opportunities abound, whether it’s through rental property ownership, Airbnb, Amazon selling, Etsy, or any other number of ideas. Do some research, identify an idea that you want—or are uniquely positioned—to pursue and see what happens.
5. Trust the process
Improving your finances and building wealth takes time. Not everything will go as planned, you will have setbacks, you’ll go over your budget sometimes, you’ll have unexpected medical bills, car repairs, etc. That’s ok!
When this happens, just remember to refocus on your long-term plans and goals. Keep your end in mind and power through the setbacks. Recommit to doing the little things and trust the process. Remember that even the best laid plans can go awry.
6. Focus on managing risk
It’s essential that you’re protected against whatever life throws your way. This is where the insurance and risk management portion of your financial plan comes into play. Insurance protects your life, your ability to earn money, ensures there is a roof over your head, and more.
A good financial plan will include an evaluation of your current coverage and identify any coverage gaps. Make sure you are prepared with the right policies and coverage. Review your insurance coverages with Savology or another financial professional to make sure you have all the recommended policies.
7. Challenge yourself … and your friends
Challenges with friends or loved ones are a fun way to get motivated to make significant improvements. You’ve likely heard of—and maybe even participated in—weight loss challenges or exercise challenges, but did you know about money challenges? As you’d expect, money challenges are typically tied to some sort of financial goal and are a great way to ditch bad habits and reinforce good ones.
Here’s a list of some fun money challenges that you can either do alone, with a significant other, family, friend or someone else. One of our favorites is the “free weekend challenge”, where you plan an entire weekend of activities that don’t cost anything. With spring in full bloom, now is a great time to find outdoor activities that are free and fun!
Onward to financial security
If you are anything like us, tackling seven new things at once can feel daunting. Start with two of the ideas from this list and see what happens. Come back after you’ve created those good habits and tackle a few more. In doing this, you’ll be accelerating your progress towards your financial goals, gaining confidence in your ability to change, and setting yourself up for a financially healthy life. Let’s get to work!