Frontwave Blog

5 Steps to Improve Your Financial Fitness

According to a recent study from the Lincoln Financial Group, nearly 90% of Americans believe their finances are in need of at least a little improvement and more than 70% planned to set financial goals in 2023. If you’re looking to trim spending, beef up savings, and improve your financial fitness, follow these quick tips.

1. Create a Spending Plan

As you work on getting a better handle on your finances, it’s important to have a clear picture of how you’re spending your money. A spending plan allows you to choose what you spend money on and helps you reach your financial goals by identifying where you may be overspending. Start by comparing your income to your current expenses. Then, track your spending so you can clearly see how much money you bring in and how much you spend. If money is tight, curbing your spending even a little can make a big difference in the long run and help you develop skills to be financially fit well into the future.

2. Manage Your Credit Card Debt

It’s becoming more and more expensive to carry credit card debt. While paying credit cards off may be easier said than done, high interest rates can snowball your debt from manageable to seemingly impossible to get out of. Remember, if you can’t pay off your card balances in full each month, you’re overspending. That’s why it’s important to keep your balances in check.

If you need help managing your debt, try prioritizing more of your non-essential spending to paying off debt quickly. Or consider a balance transfer to a card with a lower interest rate. Decreasing or eliminating your debt can help you to qualify for lower interest on credit cards and loans, making it a wise financial move.

3. Improve Your Credit Score

Your credit score plays a critical role in achieving many long-term financial goals like buying a home or qualifying for a personal loan to start a business. It also affects what interest rates you’ll be offered for loans or credit cards. If it’s too low, you may not qualify at all.

If you need to improve your credit score, be sure to pay your credit cards and loans on time, every time. Also try to keep your balances low compared to the overall amount of credit you have. The bottom line is, the better your credit score, the more money you’ll save over time.

4. Save for Emergencies

An emergency fund is a critical financial tool that can get you out of a bind and avoid racking up credit card debt if an unexpected cost comes up. But just how much should you be saving in an emergency fund? Financial experts suggest putting away three to six months' living expenses in a savings account. If you consistently put aside a small amount of your take-home pay, you'll have your rainy day fund financed in no time.

5. Create a Nest Egg

Saving for retirement is one of the most important pieces of your financial plan. It’s also one that many people leave underfunded. Many employer offer retirement plans that include a matching contribution including 401(k)s, 403(b)s for non-profit and government employees and Thrift Savings Plans (TSPs) for military men and women. While the rules and plans vary, it’s important to contribute the maximum your employer will match. Anything less and you're actually leaving free money on the table. Can't swing that much while you're saving for a big expense like a new car or financing higher education? Remember, everyone starts somewhere. So contribute what you can now and work to increase your contribution as your income and budget allow.

If your employer doesn’t offer a 401(k) or you are self-employed, look at other options like an IRA, a Roth, or a Simplified Employee Pension IRA.

Need help assessing your financial health?

The Frontwave crew is standing by to help you reach your financial goals and offers free financial checkups to help you stay on track. Give us a buzz at 800.736.4500 or swing by a local branch for your free financial checkup!