October is National Financial Planning Month, and a great way to celebrate is by reassessing your finances and making small changes that can potentially improve your financial situation.
Now is the perfect time to review your finances and take action for better financial success. Financial planning allows you to take control of your personal finances, and it can be a great way to make sound financial choices that will positively affect your life in the long term.
Check out these 8 tips for small financial changes to get bigger wins to help improve your finances:
1. Take inventory of your current financial situation.
The first step in improving your finances is taking stock of where you are now. If you don't know where you're at financially, it's hard to know where you want to go. Take some time this month to look at all of the financial accounts in your name, such as checking accounts, savings accounts, credit card statements, and retirement accounts (if applicable). Use this information to accurately picture what resources are available right now. Once you have this information, you can start deciding where money should go next.
2. Set financial goals and create plans to achieve them.
Set clear goals for yourself so that you know what exactly it is that you want to accomplish. Make a list of everything you want to do in life. It could include buying a house, traveling, or starting a family. Take time to think about what's important to you.
Brainstorm ways you can achieve each goal, and then prioritize them based on how important they are to you. Once you have a list of goals, create plans for each one by identifying your priorities and how much money it will take to achieve them. Once you have your plan in place, review it regularly to ensure it still matches your goals and priorities.
3. Review your budget.
Budgets change, especially with a change in income and expenses. Reviewing your budget regularly is important to ensure you're managing your finances beneficially. Try using a budgeting app like Mint, or You Need a Budget (YNAB). These apps can help you track your spending and spending patterns, so you can make adjustments as needed. If you're unsure where your money is going, start by tracking your spending for one month before making any changes.
4. Analyze your debt(s).
Do you have any unsecured debt? Unsecured debt is any type of debt that is not backed by collateral (e.g., a car loan). One way to get rid of unsecured debt is through the snowball method: paying off the smallest balance first, then the next smallest balance, and so on, until all debts are paid off. This method can be very effective because it helps eliminate small balances faster while keeping motivation high by focusing on one goal at a time.
5. Put a stop to paying silly fees.
Fees add up, and they eat into your hard-earned money—whether it's bank service fees, ATM fees, overdraft fees, or late fees. Now is the time to see if you can reduce or even eliminate these pesky fees:
Bank service fees:
Many banks charge a monthly fee just for having an account with them. If your bank does this, look for one that doesn't charge these types of fees.
ATM fees: Some banks charge $1 or more every time you use another bank's ATM, which can add up quickly! You might be able to avoid this by switching banks or by signing up for a bank account that reimburses you for ATM fees charged by other banks.
Overdraft fees: If you overdraft your checking account (when there's not enough money to cover all transactions), expect a hefty fat overdraft fee from your bank. Most banks will ding customers $35 to $40 per transaction, which adds up fast if you do this often! Make sure you don't set yourself up for overdrafts by keeping track of how much money is in each account.
6. Check retirement accounts and investments.
If you haven't looked at these accounts in a while, now is the time! Make sure they align with your goals and objectives, and check out other vehicles available to help reach those goals. Consider changing the amount you contribute each month or year if it will benefit you in the long run. You may also want to consider updating your beneficiary information so that it is accurate before retirement age.
7. Review your insurance policies.
It's important to review your insurance policies annually to ensure they are still meeting your needs and that you're not paying for coverage that isn't necessary or worth it anymore (e.g., homeowners insurance). Reviewing your policies will also help ensure that you have the right amount of coverage on each policy, which could save you money in the long run if something were to happen (e.g., theft or fire).
8. Set up automatic savings.
Set up automatic savings. Many households have no emergency funds. Without this type of savings, going through a challenging life situation can be even more stressful. Setting up automatic savings is also a good practice. When savings are automated, it eliminates forgetting and making excuses. Arrange for funds to come out of your bank account weekly or monthly and go right into your savings account, even if it's a few dollars to get started. For example, setting aside $20.00 per week will add up over time. That's $960.00 saved after a year! Ultimately, it will accumulate whether you can afford a little less or a little more.
We hope the 8 tips for small financial changes to get Bigger wins, help you make the most of this month (and beyond) while improving your finances. Small changes can lead to significant results, so give those that seem feasible a try. Before you know it, you'll be on your way to financial success!