Financial Resolutions: Goals for Financial Wellness
Most of us could probably agree that there were a lot of lessons learned in 2020, one possibly being, “I need to save more money.” Don’t be discouraged if your financial plans and goals didn’t work out in 2020. We can now work on a plan to rebuild (and maybe start over) our financial wellness goals!
Mini Goals
If you are feeling overwhelmed on where to begin when figuring out a financial plan, start with mini goals. These will be short-term goals that will help you get to your long-term goals. Write down your goals (short-term & long-term) and track them. Here are some mini financial goals to get you on track:
Save Your Money
- Pay yourself first: determine your take-home pay and subtract the amount you want to save. Next, take the amount you’re left with and subtract the amount you need for bills. The amount of money you have left is what can be spent on whatever else you want until your next payday.
Budget
- 50 – 20 – 30 Rule: 50% of your after-tax income is spent on needs and obligations you must-have or must-do. The remaining half should be split between 20% savings/debt repayment and 30 % to everything else you might want.
- Envelope Method: divide your income into different spending categories – bills, groceries, gas and so on. Take the amount in cash of each category and place it into a labeled envelope.
- Use budget apps to keep up with your planned spending. Keep in mind that your budget can be adjusted per month. For instance, one month you might need money for a haircut but not for the next month. The money that is not being used for the haircut can be applied another budget line item.
Manage Debt
- Evaluate your debt by checking on all of the amounts that you owe. Make sure you’re able to make payments on the due dates. If you need to move around due dates to work with your payday schedule, contact the company associated with your payment.
- Checking on your credit report will help you get a look into your debts. Check out our blog post “How to Improve Your Credit Score” for advice on how to access your credit score and on what steps to take to improve it.
- Sell things and put that money towards paying off debts. Take inventory of items in your household that you don’t use and sell them via Facebook Marketplace or other sites like Poshmark.
Identify Needs vs. Wants
- Pause some expenses that are wants while you’re paying off debt, such as clothing and entertainment.
- Remove unnecessary subscriptions, especially the ones that are hardly being used.
Overall, make sure your goals are your own and not someone else’s. Something that you’re passionate about will produce more will power and drive, which will ultimately get you through accomplishing your goals.
Baby Steps
Some of you may know that we host Dave Ramsey’s Financial Peace University course a few times a year. The methods taught in this course provide a great way to get out of debt, which will give you room to save more than ever before! The baby steps will help you organize your goals to ultimately achieve financial wellness as well. Follow these Financial Peace University baby steps:
- Baby Step 1: Save an emergency fund of $1,000
- Baby Step 2: Start the debt snowball and pay off all debt (except the mortgage)
- Baby Step 3: Save 3 – 6 months of expenses
- Baby Step 4: Invest 15% of household income into retirement
- Baby Step 5: Save for children’s college funds
- Baby Step 6: Pay your home off early
- Baby Step 7: Build wealth and give
Achieving financial wellness is possible, but go in the pace that is right for you. Reach out to us if you need help building your credit or if you need to figure out your best loan choices. Meritus CU is here to help you!
Sources:
New Year's Financial Resolutions: Get Your Finances in Shape for 2021
Five Financial Goals for the New Year