6 ways to feel more confident about your money at every life stage
A few simple rules can help you build your money confidence—the first step in securing a more solid financial future for yourself and your family. These 6 small steps can help you lay the groundwork on which to build your dreams and are simple enough to get started today.
1. Decide what you want your money to do for you.
To make your dreams a reality, you need a plan to pay for them. The first step is setting your goals. What do you want most? A college fund for your kids? An early retirement? Maybe a vacation home near that little stretch of beach where you honeymooned? Prioritize your goals as either critical, need, or want, and make them specific and actionable—if they’re too abstract, it will be too easy to deviate from them. Once you know what you want, you can plan how to make it happen.
Do this today: Write down your goal. Research shows that people who do this are more than 40% more likely to turn goals into reality.1 So grab a pen and paper and describe your dream.
2. Prepare accordingly for an emergency.
What would happen if you were laid off from work today? Or your doctor called with worrisome test results? Disability insurance protects your income if you get sick or hurt. So if the unthinkable happens, you can rest easier with income protection. It’s also a good idea to build an emergency stash: A recent study showed that 6 out of 10 Americans would be unable to cover an unexpected $1,000 expense.2 Could you weather a gap in your regular paychecks?
Do this today: Build a buffer that protects your goal savings. A good rule of thumb is 3–6 months of living expenses. If that’s daunting, start small and build from there.
3. Plan for the worst.
You probably have insurance on your car, your house, maybe even some valuables. But what about your life? It’s hard to even think about, but if you died suddenly, would your family have enough income to get by? Life insurance helps make sure that they will. Do your research and choose the type of life insurance that’s best for you and your family.
Do this today: Use our life insurance calculator to figure out how much coverage you might need and what you could expect to pay.
People who spend even a small amount of time learning about personal finance are 75% more confident in their financial future.6
4. Pay down debts.
Do big credit card bills get in the way of your long-term financial goals? Four out of 10 U.S. adults have credit card debt, and monthly interest payments can snowball quickly, putting your dreams further and further out of reach.3 If you have a lot of credit card or student loan debt, consolidating might help simplify rates so you can pay off the debt quicker.
Do this today: Figure out which of your debts has the highest interest rate. Then you can target that balance first, paying off as much as you’re able to every month.
5. Stick to a simple budget.
If setting a monthly budget is one of those things you know you’re supposed to do, but you keep putting off—you’re not alone. Six out of 10 Americans say they don’t have a budget.4 Here’s a secret: budgeting can be simple. The trick is making a plan you can stick to over time.
Do this today: Examine your bank statements and make a quick list of what you spend each month on non-essentials like your gym membership, takeout, and cable. If you’re paying monthly bills for anything you don’t use regularly, that can be your first easy cut.
6. Make saving for retirement a breeze.
More than 40% of people have no retirement savings at all.5 That’s a problem if you plan to retire someday. But don’t let worries about your future keep you up at night—make a plan instead. Getting started is relatively easy. If your employer offers a retirement plan, that’s often the best way. You can set contributions to come right out of your paycheck, so you’re saving at least a little every month.
Do this today: Review the contributions you’re making to your savings fund. Did you get a raise? Were you able to make cuts on other expenses? Increase your retirement contributions accordingly and check in with a financial professional to make sure you’re staying on track.
Financial planning doesn’t have to be overwhelming. Research shows that people who spend even a small amount of time learning about personal finance are 75% more confident in their financial future, so you’re already on your way.6
1 Source: Dr. Gail Matthews. Study on strategies for achieving goals, resolutions, 2015. https://www.dominican.edu/dominicannews/study-highlights-strategies-for-achieving-goals
2 Source: Bankrate’s Financial Security Index, 2018
3 Source: NFCC 2017 Consumer Financial Literacy Survey
4 Source: NFCC 2018 Consumer Financial Literacy Survey
5 Source: CFSI 2018 U.S. Financial Health Pulse Survey
6 Source: Principal Retirement Confidence Survey, 2018
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