It seems like everything just went downhill after the pandemic. Inflation is on the rise (pun intended) and everything
is super expensive, leading us to wonder if we are going to hit a recession. Airline tickets are through the roof. What cost me $1,000 to fly direct to Paris, now costs me $3,400 with one stop in Economy class. The trickledown effect is taking a massive toll on us as food and fuel costs have increased, passing those hikes to the consumer at restaurants and gas pumps. And, what about labor shortages, everywhere? We are wondering where everyone went and how they are making money. We are still feeling the pain of recovering from the pandemic financial setbacks. Hey, do you remember 2008? If we can survive that, we can survive this.
Now is as good a time as any to get your personal finances in order. Here are some things you can do right now to improve your personal finances. If you can stick to these, you can start seeing the rewards of lower debt, savings, and
a good credit score. Even though I help businesses and their finances, I get asked all of the time about
how to manage personal finances and how one can master that part of their lives better.
WRITE DOWN YOUR FINANCIAL GOALS IN DETAIL
You want to retire at age 55? You want to go to Europe next Spring? You want to buy a house? You want to pay off debt? All of these require a commitment to sock money away. Prioritize these goals and then create separate savings bank accounts
for these, in which monthly you automatically put a percentage aside in each bucket. I created buckets for vacation, taxes (business owners), and home improvement. You can make these anyway you want, but as long as you have a visual of what you are saving toward every time you open up your banking app, you will feel like you are accomplishing it. Even if you put $25 a month in a bucket, you are still saving.
CREATE A MONTHLY BUDGET
This may seem elementary and old school, but I have an Excel spreadsheet detailing my monthly household expenses, so I have an idea of what I need to survive. This includes my mortgage, my utilities, and anything else I spend on bills and basic living. I budget everything I spend, including my groceries/dining out. While I go over budget in a specific area, I am at least aware of where and how I need to cut back. Having a sense of actual versus budget can be very eye-opening. There are budgeting software apps you can use, like Mint, as well.
PAY OFF DEBT FIRST
Debt is the biggest obstacle for many people when it comes to reaching financial goals. First figure out the kind of debt you have and what makes the most sense to pay off. For example, I paid my car off and I plan on driving my dependable Hyundai into the ground. I locked in my mortgage rate at 3% so I don’t see a need to rush paying off my mortgage, as I plan on keeping my house forever. You will need to sit down and look at all of your debt, and select those with the highest interest rates
to pay off first and faster. Credit card debt is the worst kind of debt and should be paid off before anything else.
ESTABLISH AN EMERGENCY FUND
So, my financial advisor told me I needed to put aside 6 months of my monthly household budget aside. The three month rule no longer applies and that kind of set me reeling but I understand why now. However, if you have at least three that is a good start in my professional opinion.
FIND A GOOD FINANCIAL ADVISOR
Don’t be afraid to ask for help in this area. A really good advisor can help you create a plan and a way to save. Search for classes that offer free or low cost workshops on this topic as well. If you admire the way someone has managed their finances, ask them for mentorship. Ask them what they would have done differently when they were younger.
INCREASE YOUR CREDIT SCORE
Poor credit can make it harder for you to get a mortgage, rent an apartment, or even get a credit card. And, if someone does give you a loan, they will most likely do so with a higher interest rate. If you have fair or bad credit, defined as a FICO score of 669 or below, you may be wondering how to increase your credit score. Do not let this make you feel hopeless, as bad credit does not last forever. First off, get a copy of your credit report. You can get free copies of your credit reports every 12 months from each of the major bureaus through AnnualCreditReport.com. Dispute any credit errors, as you have the right under the Fair Credit Reporting Act. Other things you can do to improve your score are: paying off past due balances, avoiding new credit card applications, and contacting creditors for any temporary hardship programs they may have.
You can do this. And now is the time. It may feel like an up- hill battle but taking these minor steps will help you get back to where you once were or even where you want to be. I am rooting for you.
