7 Steps To Take for Financial Wellness in 2021
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In early 2021, you might have vowed to pay off debt, improve your credit score, or build an emergency fund. Perhaps you are still successful with these financial goals, or perhaps you are slowly losing momentum. Maybe you surrendered completely.
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When in one of these boats you can be sure that you are not alone. According to a study by researchers at Scranton University, only 19% of people keep their resolutions and most give up by mid-January. There are many reasons why we fail in our resolutions, and usually it has nothing to do with our willpower or lack of it. A common reason we are unsuccessful is that we don’t have clear paths to follow to achieve the lofty goals we have set for ourselves. Sometimes all you have to do is rephrase your approach to triumph.
We consulted financial experts to learn about general money goals that are harder to meet than they may appear and what you can do to make them easier to meet.
Last updated: July 8, 2021
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1. Goal: Reduce debt
Why is it so hard: “Debt can be overwhelming, and a lot of people don’t even know how much debt they owe, so it can feel insurmountable to get all of your bills in order and organized,” said Steffa Mantilla, certified finance teacher. Money tamer. “Then when you know how much debt you have, there are conflicting thoughts about debt settlement strategies and whether you should pay off your debts or keep them at all.”
This is how you do it better“Make a commitment to take an hour to list all of your debts on a spreadsheet, and then list them from smallest to largest,” said Mantilla. “If you focus on paying off the smallest of debts first, you will make a profit faster. You will likely be able to pay off a few small debts before you get to the bigger, scary amounts. These smaller profits will give you the motivation to get you through the larger debt payments. “
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2. Goal: Keeping to a budget
Why is it so hard: “As we’ve seen last year, life is unpredictable and budgeting can help you avoid some of the uncertainties,” said A.pril Schneider, Head of Consumer and Small Business Products Bank of America. “But if you set a rigid budget and never change it, it may not be relevant from month to month as your income and expenses fluctuate. Even more, if it is safer to travel and eat out without restrictions, your spending habits may be different and you may find that you are spending more than you expected in certain categories. “
This is how you do it better: “I recommend routinely adjusting your budget to maintain its effectiveness and using a rewards credit card that suits your spending habits so you can keep track of your financial goals.”
Christopher Stroup, a financial advisor working for. is working Abacus Wealth Partner, suggests turning some of the budgeting tasks off to software for better success. “Some of our favorite resources like Mint or You Need a Budget allow users to link all of their accounts to a central financial center,” said Stroup. “From there, the software can suggest a budget that takes your historical expenses into account. One of my favorite tricks is teaching the software to recognize certain expenses and place them in the correct budget category that I have created. This saves me a lot of time in the future, as I no longer have to list my expenses individually by sorting them into the corresponding expense container. The software does this for me, which gives me more time to understand where I met (or missed) my budget goal for the month. “
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3rd goal: save more money
Why is it so hard: “Saving more money is more difficult than it sounds because it is nothing more than a dream,” says Mark Henry von Alloy Wealth Management. “We have to move the concept of saving money from a dream to a goal with a deadline. “
This is how you do it better: “Pick a deadline to save more money, write it down, and then tell your family and friends what you want to achieve,” said Henry. “For example, you can say that I want to save more money this year, or you can go a step further by clearly defining your goal: ‘I want to save $ 1,000 by (August).’ You can go a step further by saying you saved another $ 1,000 through (October) and another $ 1,000 through (December). With a tangible goal like this, you will either fail or be successful. Find support to make sure you are successful. Share your goal with those who are closest to you. “
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4. Goal: Reduce costs by canceling recurring subscriptions
Why is it so hard: “You are discouraging yourself from canceling a subscription service that you rarely use because you are thinking about how you might use it in the future,” said Doug Milnes, CFA and personal finance expert for MoneyGeek. “You actually have what psychologists call ‘loss aversion,’ where the losses are greater than your gains. Loss aversion means that the gain must outweigh the loss suffered in order to make a change. So the subscription service, which you almost never use, is somehow worth more than the dollars you pay every month. “
This is how you do it better: “Frame your cancellation,” said Milnes. “Eliminate your loss aversion by making this an experiment. Remember, you can always get the service back if you want it. This takes the pain of losing service and allows you to remove the subscription that is quietly sucking money from your bank account. ”
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5. Goal: To improve my financial well-being
Why is it so hard: “The hardest part of this resolution is standing up to your struggles and making a commitment to improve your financial situation,” said Jacqui Kearns, head of financial education initiatives Affinity Federal Credit Union. “In tough times, staying positive can be difficult because you can manage your finances on your own.”
This is how you do it better: “Seek help from a professional at your financial institution who can work with you in re-evaluating your budget, exploring your debt relief options, and more,” said Kearns. “With their help, you can see your entire financial picture and organize your priorities. Financial institutions such as credit unions can also help by providing financial literacy training. With these resources you can get professional advice online, in person or by telephone. “
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6. Goal: Acquire my financial strengths and weaknesses
Why is it so hard: “It is difficult to face one’s weaknesses and often people ignore their bad financial habits because they may be afraid of being judged,” said Brett Tharp, CFP, Financial Planning Educational Advisor eMoney Consultant.
This is how you do it better: “According to a 2019 eMoney survey, 57% of adults in the US purposely avoid discussing personal finances with their friends, ”Tharp said. “Almost half (43%) say they feel stressed, embarrassed, or confused when talking about their personal finances, and 20% never talk to other people about money.”
“The first step to long-term, positive financial behavior is to be honest with yourself,” Tharp continued. “Identify your positive habits and understand where you can make improvements. For example, if you have bad credit, determine what led to this situation and know that there are ways to fix it. At the same time, acknowledge the things you do well, like paying bills on time or building an emergency fund. “
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7. Goal: Earn more money
Why is it so hard: “Many people have only one source of income and that is from one employer who controls how much you make and how often you work,” said Sam Hawrylack, personal finance expert and co-founder of How to FIRE. “Traditional ways of increasing income, such as promotion, take a long time and even additional certifications and degrees.”
This is how you do it better: “You no longer have to spend thousands of dollars to impact your income. Start small with rewards programs like cashback or survey sites, ”said Hawrylack. “When you have more time, look for ideas for side activities and passive income. You could end up making extra money with a hobby! Better yet, put your existing money to work for you by investing. There are plenty of beginner-friendly investing options, including apps like Acorns and Stash that put the change into your purchases. You will most easily hold on to your resolution if you enjoy the extra work or if it does not require a lot of work. “
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This article originally appeared on GOBankingRates.com: 7 Steps to Financial Wellbeing in 2021