Improving finances can feel like a tall order. Taking on any challenge is daunting and the first step is usually the hardest. Knowing where to begin is hard enough and sometimes we can be our own worst enemy. When it comes to our finances, it can be difficult to know where to focus first. Don’t let analysis lead to paralysis.
If you’ve neglected your retirement savings and finances in general, don’t try and repair the damage all at once. Take some easy steps. If you try and take on too much, you risk burn out and the inevitable feeling of biting off more than you can chew. If you haven’t exercised in a while, don’t start by running a 5k. Build up to it by starting out with some achievable milestones.
Improving Finances: Take 5 Easy Steps
Easy Step 1: Give yourself a raise. Increase your 401(k) or other retirement account contributions. After all, don’t you deserve a raise? Contact your payroll or retirement plan department and increase the amount your’re contributing. Even if it’s only a 10% increase, do it now and when you’re ready to tackle more, increase it again. Get in the habit of gradually increasing your retirement contributions.
Easy Step 2: Help junior pay for college. Many 529 College Savings Plans can be started with as little as $25 per month. Type 529 into a search engine and you can be opening an account with a major financial institution within a few clicks. If you need to do a little more recon, research which plans might be right for you.
Easy Step 3: Update your retirement account beneficiaries. Make sure to check the beneficiaries on your account. If you have any type of IRA or company retirement plan like a 401(k) or 403(b), make sure your beneficiary elections are up to date. Calling your investment provider or contacting your retirement plan administrator can be an easy way to see who is listed as a beneficiary. Also, many retirement accounts allow you to choose a contingent beneficiary in case something happens to you and your primary beneficiary at the same time. A quick phone call can make a big difference for your loved ones financial future.
Easy Step 4: Pull your credit! You are entitled to request your credit report at no cost once a year from the three major credit reporting agencies. Monitoring your credit is critical to your financial success. Unresolved or incorrect issues on your credit will result in higher borrowing costs at least and denial of credit at worst. If you don’t have a 720 credit score, start taking the steps to improve it.
Easy Step 5: Start an emergency fund. Credit cards are not an emergency fund. Start saving a portion of your pay to handle the unexpected expenses that inevitably pop up to help you avoid the credit card trap. If you don’t have a rainy day fund, start one. If you have one, give it a boost!
You don’t need to tackle all of these steps at once. Take them one at a time. Once you do, you’ll be ready to take on more and you’ll be amazed at what you can achieve.