Do Your Finances Need a Reset?

Banks Editorial Team · November 17, 2017

Hitting the financial reset button can seem like a big undertaking, especially if you’ve racked up any amount of debt.

The older you get, the more it might feel like you’ll never be financially stable. Student loans, mortgages, and even just plain old credit card debt adds up and is easily ignored when you’re young, leaving you panicking later in life. Fortunately, there are several steps you can take to hit the reset button, come back from all those reckless financial mistakes you made in your youth, and set you back on the right path to financial security.

Make a Plan and Set Your Own Goals

It may sound simple, but financial security starts with you. Create a plan and stick with it, but make sure it is a plan that you are comfortable with and know you can keep. Figure out what you’re spending money on and distinguish between necessities and luxuries. Looking for ways to cut back on both will require you to make some changes, but those changes will be beneficial in the long run. As you get older, these changes may differ some, but the concept remains the same.

Evaluate your lifestyle and be decisive when it comes to spending. This might mean waiting on the big things, like going a few more years before buying a house, or not buying a new car just because you can. It might also mean that you cut back on the little things—not going on as many shopping sprees, or eating out less. Each little bit that you can put toward the important bills and loans is one more step toward financial security.

Set both short and long-term goals for yourself. Planning for the future is easier when you know what you want. Will you need education funds for your children? What do you want a retirement plan to look like? Even if you aren’t able to start right away, knowing where you are headed will help you make the right decisions when you get there. Make the small changes now and keep the bigger needs in mind. Set priorities and stick to them. You’ll thank yourself later.

Pay Off Debt and Save the Excess

Student loans, credit card debts and mortgages start to pile up more and more as the years pass. Figure out a payment plan for yourself and budget the rest. Paying off your credit card debt as soon as possible will help you improve your credit score, and good credit scores can help get you better deals on mortgages.

Even as you pay off your debt, though, it is a good idea to set aside some money each month. Having an excess “emergency fund” in place in case of any financial hiccups will ease your financial worry.

When your credit card debts have been managed and paid off, you can start planning and saving for retirement. Too often, retirement plans are forgotten about until much later in life, but being aware of your options and opportunities early will add to security later in life. This may mean making a few spending cuts in your 30’s, 40’s and 50’s, but the overall payment will be more than worth it.

If you can, invest some extra money. As you start to earn more money, it can be easy to start spending more money. But if you invest or save it instead, you’ll be able to keep a higher quality of life even as you grow closer to retirement.

It doesn’t matter where you are or where you’ve been. With a little planning and commitment, anyone can reset their finances and find financial security.

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