A quick Google search of âfinancial literacyâ will yield thousands of results, listing an infinite amount of doâs and donâts that should (and shouldnât) be followed to guide you along on your financial journey.
However, when you think of financial empowerment â what comes to mind? As defined by Merriam-Webster, empowerment is âthe act or action of empowering someone or something: the granting of the power, right, or authority to perform various acts or duties.â No matter what your current sentiments are related to your finances, we will explore three key areas to not only embrace; but to help you prepare for a strong financial future.
Now more than ever, we all have a laser-sharp focus on our money and where itâs being spent. The pandemic has generated a hypersensitivity to how we treat our finances while also determining what essential expenses look like and where they fit into our budget.
Before life as we knew it to be shifted, many of us donât have to look too far back to remember a time where we didnât check our accounts as often, our savings plan would fluctuate month-over-month or our emergency fund was used to bail us out of some impulsive spending.
To make sure those days are forever of the past, make it a habit to take inventory and audit all of your accounts. Take at least 15 – 30 minutes to review over any transactions and deposits across all active accounts. Not only does this help improve your self-accountability, but you are also able to make any disputes if anything appears incorrect and resolve quickly.
Another small but impactful tip is to acknowledge your financial health. What top three areas will be your main point of focus? If this is something you donât know offhand, review your transactions from the last three months and categorize them. How much of your money went to impulsive buys or things that could have been purchased at a later date? Are you seeing an influx in overhead expenses or credit card payments? Are there any spending patterns you can explicitly see? Allow this exercise to serve as an eye-opening experience.
In order to determine where you want to be, you must first truthfully acknowledge where you are. This sets the blueprint and overall expectations with your personal finance journey. Knowing where you are may not feel pleasant but avoidance will lead to bigger consequences.
Even though we donât like to admit it, thereâs always room for improvement and our finances are no exception. The first thing that guarantees mastery is actually following the budget thatâs created. This serves as a guardrail â itâs used to keep us on track so we can greet our financial destination with open and inviting arms.
Once thatâs in motion, explore ways to enhance your financial experience. Begin by automating recurring expenses, such as cellphone service or utility bills. Thatâs why itâs so important to be as honest and accurate as possible when setting a budget. Nothing should come to you as a surprise outside of any emergencies. When you trust yourself and the financial work youâve put in, your finances have no choice but to follow suit.
If you havenât already (or need to get back on track), work to beef up your emergency fund and savings account. Emergency expenses have a tendency to appear out of nowhere, so you want to dedicate a set dollar amount or a percentage every pay period. Setting up an automatic transfer to these accounts establish a routine while putting your mind at ease in the process.
Is there a hobby or skill youâd like to put to use and monetize? No matter how grandiose or small, this can definitely expedite achieving your financial goals. The money earned from a passion project can go toward savings, paying off debt or simply getting back to a place of comfort financially. Vacation funds or prepping for large purchases such as a car or home can also fall within this category. If you want to seek the assistance of a professional, search for financial advisors or coaches that could help you with reaching your goals. Preparation is key and your future depends on it!
The foundation has been laid and youâve been committed to crushing your financial goals. The budget and savings goals are in motion; so whatâs next? Itâs time to celebrate! Walk into your financial future with your best foot forward. When times seem bleak, remind yourself of your goals early and often.
Reinforcement such as daily reminders on your phone, having goals posted somewhere in your home you can see daily or reciting positive financial affirmations will serve as a second wind when you want to throw in the towel. Be sure to celebrate wins along the way such as debt payoff, reduction or hitting a new savings goal. Never been able to invest before and now you have the additional income to get in the game? Celebrate that!
The best way to generate excitement is to rally your family and get them involved. Create family challenges to get your children excited about saving funds and reallocating money. Come up with creative ways you all can commemorate knocking out a goal by ordering from your favorite restaurant or saving for a family staycation.
In order to walk in confidence, you have to build up the courage to begin no matter where you are or how many times youâve had to start over. Each step counts â each successful budget, savings goal and consistent reduction of overall expenses. Be sure to keep in mind, financial freedom looks different for everyone and has the ability to pivot over time. While some may want to vacation throughout the year, save for their childrenâs college fund or wipe debt out completely, all are significant and take sacrifice. What is the key to achieving such a pinnacle level of confidence? Time.
Be kind to yourself and understand mistakes should never be equated to failures. Your commitment to this financial journey will always be rewarded.
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