Planning for your financial future can be overwhelming and intimidating. There are so many strategies for retirement planning, budgeting, paying off debt, and saving; how do you figure out what to prioritize? It can also be challenging to take actions in the near term that pay off in the long run, especially if the long run (retirement) is 20-30 years away. Here are a few simple ways to act now and benefit later.
1. Check Your Credit
A credit check is easy to do online, and many companies offer them for free. Checking your credit is important for understanding your financial standing and ensuring the accuracy of what is being reported. Ensure that your name, address, Social Security number, and personal details appear correctly. These details are known as your personally identifiable information. If you notice any inaccuracies, you can contact the reporting credit bureau to fix the information.
It’s a good idea to also review the details and history of the credit accounts reported on your credit check. Checking the account details can make you aware if someone has misused your PII to commit identity fraud by opening a line of credit in your name.
2. Pay Yourself First
Paying yourself first is essentially putting your retirement on autopilot. Only one out of every four Americans has enough retirement savings, so it’s best to start saving as early and as much as you can. If you have a 401K via your employer, a great way to get ahead is to contribute the maximum amount from your paycheck your plan will allow. This way, the money never even enters your bank account to be spent and is automatically saved. You’re essentially paying the future you first.
Paying yourself first is also a smart approach to saving in general. You can follow the same principle by setting up automatic withdrawals into a savings account. This will help you kick-start savings for things like a down payment or emergency fund.
3. Download an App
Tracking your spending used to mean balancing a checkbook or sitting down in front of a spreadsheet. Thankfully, there are apps for that now, and they make it incredibly easy to track and categorize expenses. Financial tracking and budgeting apps work by linking to your bank accounts and auto-tagging transactions. Tracking your spending is an essential first step to creating a budget. Visualizing and categorizing your expenses can provide previously unknown insight into your financial habits.
Using a tracking app to manage your spending is also a great psychological tool that can limit impulse buying. When you see cash flowing out via your tracked spending, it creates an additional level of accountability and transparency. Before you click that add-to-cart button, you might click on that tracking app instead.
4. Wait 30 Days
As consumers, we are constantly messaged by advertisers via social media feeds, email inboxes, and push notifications. These incentivizing triggers are inescapable and hard to resist. Spending a small amount on a new item may feel like no big deal, especially if it’s marked down or on offer. However, these small ticket items can add up in the long run and sabotage your budget.
If you suspect you are the house in your neighborhood with the most delivery boxes on the porch, the 30-day rule may be for you. It’s simple: Before making a shopping purchase, wait 30 days. If after 30 days you’re still thinking about the item, then get it! The stronger likelihood is that you’ll have forgotten all about it and have an extra few dollars in your pocket instead.
Managing your finances doesn’t have to be overly complicated. These are smart, simple actions you can take to improve your financial health in the short and long term.