6 steps to financial security
Tips for staying focused on securing your financial future
October 12, 2022 5 min read
Your finances are like a garden—but not quite like a bed of super-hardy geraniums. They take time, attention and commitment in order to thrive.
Just like it’s easy to let a garden get overgrown, it’s easy to let your finances get out of control. But keeping up is crucial to building your savings account, reaching your financial goals and making progress toward financial security. Here are some tips for keeping focused on your finances, so you can worry less and get more enjoyment out of your money:
1. Ask yourself: “What is financial security?”
It means different things to different people, and that’s perfectly fine. Only you know what will make you feel at peace about your finances, so it’s important to decide what that looks like for you. For some, feeling financially secure comes when they know they can handle a financial emergency. For others, it’s being on track to reach both their short-term and long-term financial goals. Spend a little time thinking about it so you can come up with a few tangible goals you’d feel really good about achieving.
2. Get regular checkups
Does the inspiration to clean up your finances come every few months? Or just once a year during tax time? If you make a habit of reviewing your finances regularly, managing them can become quicker and even more rewarding.
A practical place to start is by building an accurate and functional household budget. You can use a simple spreadsheet template like one of the budgets templates or a budgeting app like Mint or You Need a Budget. Then block off a certain time each day or week to spend with it.
What budgeting does is help categorize your spending, so you can see exactly where your money is going. Apps and banks will usually recognize types of transactions and group them for you, such as labeling Whole Foods as groceries and Exxon as fuel. But it will miss some, and going back several months can take time. So it’s vital to make a habit of checking it regularly—at least a few times a week. Going back a few days will take just minutes and give you insight into exactly how your dollars are being spent. Once you've done this, you’ll be better able to see where your spending is on track and where it could use some trimming.
3. Hold annual summits
Weekly check-ins are great for short-term financial goals. But what about those long-term financial goals, like securing retirement planning or buying a home? How do you stay on top of those?
One way is by scheduling an annual summit. Once a year, set aside a day to assess your financial security. What you accomplish will depend on your personal finances and goals. For instance, you might check on your budget, get your credit score, assess your debt and see where you stand on investments and retirement savings. If you have kids, you might make a plan to save for college and think about how their expenses will change as they get older.
When you hold your summit is a matter of preference, but it may make sense to do it toward the end of the year. That way you can decide whether you want to make any donations to charity, invest in an IRA or do anything else that might make an impact on that year’s taxes. You can also start gathering what you’ll need to complete your taxes by the filing deadline.
This exercise may help set you up for a year of money management successes. And there’s no reason not to reward yourself once you’re done. Whether it’s movies, bowling or a big family dinner at your favorite restaurant, celebrate what you’ve just accomplished (so you’ll keep the tradition going year after year).
4. Share the load
Tackling your financial future alone can be challenging. If you have a spouse or partner, strive to share the burden of tracking financial goals as a couple or a family. Ask each other, “Am I financially secure?” Then try to answer the question together. Working as a team to make financial decisions together can lighten the workload and get you on the same page about financial goals and priorities.
If you don’t have a budget, why not build one together? That way both of you can track your spending, outline specific savings goals and have regular discussions about securing your financial future. What matters most is that you’re both in agreement about where you are and where you’re headed. When it comes to real-world tasks, divide and conquer: One person can lead the way on doing taxes or making investment choices, while the other person can help gather important documents, organize files or scan receipts.
5. Learn tools of the trade
Like fantasy sports and hailing a cab, financial security planning has been made significantly easier by the advancement of apps. If you’re comfortable with it, every aspect of your financial life can be managed with a few swipes.
For tracking your spending and saving, try your bank’s mobile app and a budgeting app like the ones mentioned above. For investments, consider one of the many popular stock-trading apps. Come tax season, compare some of the best mobile tax-advice apps and pick the one that best fits your needs.
Not everyone’s ready or able to rely entirely on technology, but if there’s a financial task or two that you can do faster, better or more accurately with digital assistance, it may be worth a shot.
6. Bring in reinforcements
When you’re just starting your career, your finances can seem simple enough to tackle on your own. But as life gets more complicated, so does managing your financial goals. This is when experts can make a big difference, even in the age of apps.
If investing online isn’t for you, consider hiring a Certified Financial Advisor. Ask trusted friends for referrals or consult the National Association of Personal Finance Advisors (NAPFA). At tax season, online services can make filing your return seem like a breeze. But if your finances are complex, using an experienced tax preparer may pay off. And if you need help seeing the big picture, a Certified Financial Planner can help you establish and reach your goals across all of these personal finance categories. You can find a local planner and review their credentials on the CFP Board website as well as ask friends and relatives who may be able to make referrals.
Whether you’re just starting out or are well into your financial journey, it takes work to feel secure about your money. But just like in your garden, that work will feel worth it when you see your finances flourish.