Whether you’re currently struggling financially or looking ahead with the goal of building a financially sustainable future, there are certain steps, or “building blocks,” you can follow to ensure financial well-being.
When planning for tomorrow, it’s always a good idea to start by creating a budget. The first step is to figure out how much money you have coming in each month and outlining all your expenses. The details matter when getting a broad picture of where your money goes every month. Make sure to create a realistic plan to reach your goal—sustained financial health. If you don’t have much money to set aside each month towards savings, you may need to reevaluate what you’re spending your money on. Can you make cutbacks? Examining your credit card statements for subscriptions that can be eliminated is a good place to start.
As an extension of the budgeting process, you should take this time to assess what debt you might have and decide how you want to pay it off. According to CNBC, in the final quarter of 2019, credit card debt in the U.S. had hit a record high of $930 billion—so if you struggle with this sort of debt, you’re not alone. To build a better future, however, you should make a plan of attack to pay it off. There are several options that don’t include bankruptcy or paying the minimum payment for years: the debt avalanche, the debt snowball, and finally, a debt management program, which is designed so that you can pay off debt in three to five years. Paying off debt will boost your credit score, and best of all, free up funds for you to apply to your savings.
Yes, it’s important to save money. Having an emergency fund for potential fiscal hardships and setting yourself up with a retirement fund are all parts of building a healthier financial present and future. Experts advise that as long as you can pay your household needs, taking tax return money and directing it towards savings is a healthy way to apply those funds.
Finally, educating yourself on the financial process, whether it’s fully understanding the ins and outs of credit cards or even how a checking account truly works, will set you on the right path toward making better decisions that benefit your fiscal health. Credit counseling agencies can offer both debt consolidation services and financial workshops to help educate people on how to better handle their finances and understand them.
While the building blocks to creating financial wellness may take some time, it’s well worth it to plan for today and tomorrow.