Everyone needs help reaching financial goals at some point. Whether it’s an unforeseen household expense, medical bills, or even keeping up with everyday life, getting your financial health back in a good place can feel challenging.
One universal piece of financial advice is to create a budget tailored to your income and expenditures and try to stick to it. However, exercising financial discipline is easier said than done.
Related: How average Americans can better plan for 401(k), retirement income
Mid-year is an optimal time to assess your financial performance thus far and create a plan to improve it.
Liz Miller, CFP and Founder of Summit Place Financial, recently sat down for an exclusive interview with TheStreet at the New York Stock Exchange to discuss how to build a financial wellness plan that will set you up for success. While hiring a professional to manage finances is great, that may not be an option for everyone.
Miller outlines a few key steps to managing your financial future.
Creating a financial plan that works for you
Miller suggests a practical approach — outlining your income streams and recurring expenses will allow you to assess your financial state.
“The very first step is an inventory, and that means making a list, as tedious as that sounds," she said. "Checking accounts, credit card balances, and everything you have taken in or owe, and write it all down. And you'd be surprised how good it feels just to see that in front of you.”
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“And that gives you that starting point to say, ‘Okay, here's what's coming in the door. Here's what needs to go out the door. Here's my bucket of any savings or assets I have. And then here's what I'm going to have to pay out,'" Miller said. "It starts making it very clear where you're going."
In addition to mapping out a realistic budget, Morgan Stanley and Citizens Bank recommend incorporating a few other changes as stepping stones to financial stability:
- Check-in on your emergency savings: Having a nest egg is critical to staying afloat during difficult times. Prioritizing short-term financial wellness in addition to long-term goals will help you stay on track while addressing any unexpected bumps in the road.
- Make a plan for tackling debt: Choose the method that works best for you to pay off debt.
- Target high-interest debt first: Pay down debt efficiently by addressing high-interest debt to save money on accrued interest.
- Address low-debt balances first: Stay motivated with quick wins by repaying debt with the lowest balance.
- Prepare for any changes to your insurance during the November Open Enrollment period: Ensure your insurance covers your family’s health needs, and factor in any plan changes to your budget.
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The most impactful mid-year financial changes
“The big tweak now [mid-year] is to see where you have been. Maybe your resolution in January was to get better control of your spending, but it was just too overwhelming," Miller said. "And you tried keeping track of anything, and nothing happened.”
Related: Dave Ramsey explains how your mortgage is key to early retirement
“So this is the time to see if you are spending much more than 30% on those choices," she explained. "That's the bucket. I always say to start with mid-year: How much are you spending on the things you have control over? And when you list them out, can you make some proactive decisions?”
Miller suggests that even cutting out small luxuries and saving where possible can impact long-term savings goals.
“I know someone who was a Starbucks addict," Miller said. "They decided to get a Keurig and make coffee at home, only going to Starbucks once a week. That started saving $100 over a month, and it got put into savings. So little things that you really can live with.”
“But when you make anything like a workout goal, if it's too big, it's not going to work," she added. "You really have to look at where I am spending all these things and what ones I can actually change.”
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