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Five steps to financial security and success in 2019

January 9, 2019

By Jasmine Jordan, Family Foundations

The phrase “financial security” brings many visions to mind, but what does financial security look or feel like for the average person?

It’s the exhilarating feeling of having enough money to cover necessary expenses, some indulgences and STILL have a balanced budget. It’s the comfort of not having to “rob Peter to pay Paul,” or live paycheck to paycheck. It’s also the ability to save for a rainy day and covering the cost of a getaway without owing someone upon returning home. And of course, it’s saving for an enjoyable and consistent retirement.

Family Foundations, a United Way partner, offers tools, skills, support and solutions for families and individuals to benefit by translating financial knowledge into better financial behaviors. And we know the overarching idea about financial security is comfort and living reasonably stress free in regards to personal finance management, but who says you can’t make those visions a reality?

Here are five money-management tips you can implement to bring you closer to actualizing your dreams of financial security and success in 2019.

1. Solidify a plan with action items and time frames for what you want to accomplish and stick to it.

According to Inc., you are 42 percent more likely to accomplish your goals if you write them down. Envision where you want to be by creating a vision board or designing some other visual representation of where you want to be and what you want to accomplish. Keep that in the forefront of your mind to keep you encouraged as you work toward your goal. Short-term goals require less than 12 months to accomplish, whereas long-term goals require 12 months or longer. Prioritize the tasks you want to accomplish within the next 12 months and beyond and align your goals to match.

Now it’s time to get to work!

2. Create a spending plan and start tracking expenses.

The best way to make your money work for you is to tell your money where you want it to go and what you want it to do. Make time to review your monthly income and expenses to determine an appropriate spending plan. Then, create your strategy based on your goals. For example, a short-term savings goal could be saving enough money to pay off a small balance credit card or debt (perhaps, something under $300). Review your bank statements regularly, track your spending using a notebook, an expense spreadsheet or through a money management tool like Mint. Compare your spending patterns to the plan and make necessary adjustments. Track EVERY purchase to identify unnecessary expenses that could be reallocated to accomplish your goals faster.

3. Set aside money each month to start or build a short-term or emergency savings account.

Every dollar you save is a dollar that doesn’t have to be financed or borrowed. Start with whatever you can, even if it’s $5 per pay period. Pay yourself first because chances are if you try to save after everything else taken care of, you may not have anything to save at all. Some employers have the option to have your savings sent directly to your savings account via payroll deduction so it’s taken out before you can see or spend it. It’s not about the amount you’re saving, but the habit of learning not to spend each dollar you have and having the discipline not transfer it back into your checking account.

Using your tax refund is another great way to create a savings nest egg, even if you use a portion for other obligations and save the rest. One client was able to examine her expenses and discovered if she spent less money eating out, she could save an additional $200 a month which allowed her to save nearly $1,500 in four months. Once you’ve saved enough for three months of your monthly expenses, review your spending plan and see if you can set up an account exclusively for a vacation or reward.

4. If you have debts, develop a plan to pay them off.

When it comes to paying off debt, start with the smallest balances or the highest interest rates. Once one debt is paid in full, take the money used for that debt and roll that into paying off extra into the next debt, otherwise known as the snowball method. One client used this method over a period of 16 months in combination with reducing her expenses and was able to pay down over $15,000 in debt and increase her credit score by more than 80 points. Stay encouraged — you didn’t get into debt overnight and you won’t get out overnight either. So, be diligent and stick to your plan to see the fruits of your labor in time.

5. Setup or continue putting money into a retirement account.

The earlier you start saving for retirement, the better. If you’re employed setup a retirement account and find out if your employer matches and what the match requirements are. If possible, try to receive the highest match. Compound interest, meaning the interest you earn each year is added to your principal, so the balance doesn’t merely grow, it grows at an increasing rate, works in your favor especially over time. If you’re self-employed, sit down with a financial adviser to setup a retirement account and determine what investment options work best for you.

Having a little trouble with solidifying those action steps and need an extra push of motivation to see those dreams become reality? Family Foundations can help through credit counseling, pre-purchase housing counseling as well as, individual financial counseling. Visit familyfoundations.org to connect with a personal certified financial counselor to get you rolling on the road to financial success.

How you can help

With the support of United Way, agencies like Family Foundations are able to help individuals and families in Northeast Florida have hope and reach their full potential. Through the power of partnerships, we help hardworking families become more financially stable through fostering economic growth and productive employment. To learn how you can join United Way in the fight for community change, visit unitedwaynefl.org/get-involved.