6 Easy Ways to Become Financially Fit in 2022
About half of Americans make New Year's resolutions each January, but only about 20% of people keep them. Getting into shape and achieving financial goals are among the most popular resolutions. (Statista.com)
While we can’t help you reach your ideal weight, we can share six easy ways to help you become financially fit this year:
1. Put your money on autopilot - Set up direct deposit, authorize electronic payments, and automate routine savings. Streamlining your finances with online tools saves time, helps you avoid late fees and overdraft fees, and makes saving easier.
2. Create a spending plan - Only 40% of adults have a budget, according to the National Foundation for Credit Counseling. Use a free online budgeting tool, like Mint or PocketGuard, to keep track of expenses and compare it to your monthly take-home pay. Then, see where you’re spending too much and make the necessary adjustments.
3. Build an emergency fund - Not having an emergency fund is like driving without wearing a seatbelt; it’s a risk that could ruin your life. More than half of Americans don't have a rainy-day fund, and 40% don’t even have $400 in cash saved for emergencies. You can start small, $10 to $20 per paycheck, but work to save 3 to 6 months of income. Set up an automatic transfer from your checking to your savings account to make it easier.
4. Increase your credit score - Pay all bills on time, every time; pay more than the minimum; don’t use more than 30% of your credit; avoid opening many new accounts in a short time period; and keep the oldest existing credit (the longer your credit history, the better). Also, if you have parking tickets or library fines, pay them off. Unpaid debts are reported to a credit reporting agency, which can knock down your credit score.
5. Request your credit report - Make sure there are no errors and no one is using your credit unlawfully. Request one free credit report a year from each of the three major credit reporting bureaus by visiting annualcreditreport.com.
6. Beef up retirement funds - Make regular contributions to a retirement savings plan such as a 401(k) or IRA. If your company offers a 401(k) plan, contribute at least enough to meet the company match. If you don't, it's like leaving free money on the table. Some folks contribute to a 401(k) and have a Roth IRA to help maximize their retirement accounts.
Did you know you can open an IRA at your local credit union? Credit unions offer members reliable retirement options. For instance, First Florida Credit Union members always have the option of scheduling a free consultation with a financial advisor through First Florida Investment Services. They offer services ranging from retirement income planning to tax-efficient investing strategies to estate conservation.
By following the six steps above, you’ll be financially fit in no time and on your way to increasing your net worth.