Five Steps to Healthier Finances

Achieve Your Financial Goals

It’s time for a fresh start! Don’t dwell on last year’s setbacks – it was a tough financial year for many. Instead, look at concrete steps to move into a fresh year of healthy finances with manageable goal-setting and simple steps that everyone can do and won’t overwhelm.

1. Set realistic goals!

If you haven’t yet set goals – set a few! But important – set yourself up for success rather than failure, by making sure they are manageable!

You don’t necessarily even need a calculator for this one, but be sure to think about 3 – 5 financial goals you’d like to accomplish over the next twelve months. Keep them real and manageable so that you won’t be easily thrown off-track or discouraged. Perhaps two more easily attainable and shorter term goals to give you an opportunity to check them off the list and feel success – followed with another two more challenging. Maybe they include buying a new car, paying off your credit card or finally making a meaningful contribution to your retirement savings. Be sure to attach a number to your goals. This makes them real and helps you figure out the game plan for setting those funds aside. If you are in a relationship, ask your spouse or partner to do the same, then sit down to compare your goals. If your main priority is to become debt-free next year while your partner’s focus is taking a 3-week trip to Bali , this is the time to understand what each of you want and jointly set some priorities.

2. Create some accountability for yourself.

Like many New Year’s resolutions, it’s easy to lose track of what you are striving for as soon as the calendar turns to February. So take the opportunity to set up some benchmarks and check-in points for yourself ASAP if you haven’t already. Set your computer to remind you about your goals on the last day of every month, or schedule a quarterly call with your financial planner, accountant or spouse — whoever can best help you stay on track throughout the year. Cut your goal into digestible quarterly achievements to stay focused and motivated. For example, if your goal is to have $5,000 cash in an emergency fund, you’ll probably want to have accumulated close to $2,500 by June 30th. If you need to do smaller amounts, spread it out – whatever is easy to manage!

3. Pay yourself first

If the financial roller coaster of the past year showed us anything, it’s that we all likely need more than we thought to retire. Regular, automated paycheck deductions for retirement savings are one of the very best financial habits you can create for yourself, and this is the perfect time to get started or see if you can increase how much you are saving. Even if it’s just $25 per paycheck, directing money towards your tax-advantaged retirement account (generally provided through your employer) will help you build substantial savings over the years to come and show you how painless and easy it can be to become a disciplined saver.

You can use this same concept to direct money to your Top 3 goals. Set up separate or subaccounts in advance and be sure to name them with their intention. Put a positive spin on your goals. Seeing an account named “New MommyMobile” is certainly more fun than “Savings” and clearly states when you are “allowed” to use it (a common problem when we have general savings…we get scared whenever we actually spend some). “House Surprises” instead of “Emergency Fund” lets you feel good when you have to pay the plumber. Determine the amount you want to save in advance and direct deposit into each fund. You may want to jumpstart each one with some cash from your current savings, in case the water heater breaks next month. Send the money to its goal before you even see it.

4. Lock yourself away for a mandatory afternoon of savings

We’ve all seen the commercials about how we could save hundreds on our auto insurance, and you may even suspect that it’s true, so why haven’t you called yet!?! Pick an afternoon to check how much you might be able to save on all of those pesky recurring charges that you haven’t bothered to check in on. Lock yourself in a room and call around to find out if you are getting the best and most appropriate rate on your auto insurance, cell phone plan, cable tv, gym membership and anything else that you pay for on a monthly basis. Be sure to scour your credit card statements for anything that you are still paying for, but stopped using long ago (like unread magazine subscriptions) and cancel those services, too. Find just $42 in monthly savings, and you’ll end the year with any extra $500 in your pocket, without making one single change to your lifestyle!

5. Understand your credit picture

With consumer credit still incredibly tight, it is more important than ever to actively manage your credit profile. Start with your credit reports, which you can get free once per year from Scour them for inaccuracies and promptly write dispute letters for any errors that may be negatively impacting your credit. Next, check in on your credit scores. While you’ll need to pay for access to get precise numbers, a number of free websites, such as Credit Karma are offering increasingly accurate FICO score estimates. Be sure to check out the impressive free credit report card tool from It gives you a letter grade for each facet of your credit score and offers actionable tips on how you can improve.

Significant new credit card laws are also taking effect in February, so check in with each of your lenders to confirm any rate or fee changes that may effect you — some lenders have increased interest rates by more than 10% on millions of Americans in anticipation of the new laws taking effect. While you have them on the phone, this is the perfect time to ask for a rate reduction no matter what interest rate you are currently being charged. Rate reduction = instant savings!

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