Aside from physical health, arguably nothing else impacts quality of life more than having access to sufficient financial resources to take care of yourself and your family. Financial resources can provide you with a safe place to live, proper nutrition, and access to quality health care and educational opportunities, among other critical benefits.
Today’s world offers both unparalleled opportunities to earn a great living and endless ways to easily spend those hard-earned dollars. It’s never been easier to buy things right from your phone or computer and quickly get saddled with debt. Living beyond your means is all too common.
Here are some key steps you can consider over 24 hours to begin to strengthen your finances:
1. Commit to saving the right amount, based on your income and future plans. “Do not save what is left after spending; instead spend what is left after saving.” -- Warren Buffett
If you are not dedicating between 10% and 15% of your income to savings, you are likely not building sufficient cash reserves. A great way to start improving your savings is by reviewing your contributions to your retirement accounts and consider increasing them.
As many people face financial strain resulting from the COVID-19 pandemic, the importance of having emergency savings that can cover expenses for several months in the event of lost income is more evident than ever. (More on establishing an emergency fund.)
2. Commit to increasing your earning potential. Continuing your professional development in your chosen career, or acquiring new skills, is key to increasing your earning potential. (More on how to maximize your income.)
3. Review your 401(k) investment. It is estimated that 1 in 5 workers do not get their 401(k) match. If you are fortunate enough to have access to a 401(k) at work, take advantage of any match your company provides.
4. Make investing in yourself fun. While I know retirement may not resonate with folks, especially younger generations, think of saving instead as attaining the financial freedom to do what you want to do later in life. Continually learning is the key, and here are some great resources for you to begin:
- Got an Hour? 10 Things You Can Do to Improve Your Finances
- 20 Ways to Take Control of Your Finances
- Financial Topics at LetsMakeaPlan.org
5. Stay focused. Just like exercise, financial fitness requires staying committed and being consistent. Dedicating even a short amount of time every day to focus on your finances will pay dividends for the rest of your life.
A CFP® professional can help you identify financial goals and create a plan to achieve them. Reach out to a CFP® professional to get started today.