7 Steps To Take for Financial Wellness in 2021

7 Steps To Take for Financial Wellness in 2021

Nicole Spector   Thu, July 8, 2021

At the start of 2021, you may have vowed to pay down debt, boost your credit score or build an emergency fund. Perhaps you're still going strong with these financial goals, or perhaps you’re starting to lose your momentum. Maybe you've surrendered altogether.

If you’re in any of these boats, rest assured that you’re not alone. According to a study by researchers at Scranton University, only 19% of people keep their resolutions, and most give up by mid-January. There are a lot of reasons why we fail at our resolutions, and usually, it has nothing to do with our willpower or lack thereof. One common reason we’re unsuccessful is that we don’t give ourselves clear paths to achieve the lofty goals we’ve set. Sometimes, all you need to triumph is to simply reframe your approach.

We consulted financial experts to learn common money goals that are harder to stick to than they might seem, and what you can do to make them easier to follow through on.

1. Goal: Pay Down Debt

Why it's hard to do: “Debt can be overwhelming, and many people don't even know how much debt they have so tallying it up and organizing all your bills can feel insurmountable,” said Steffa Mantilla, certified financial education instructor, Money Tamer. “Then once you do know how much debt you have, there are conflicting thoughts on debt payoff strategies and whether you should even pay your debt off or keep it.”

How to do it better: “Commit to taking an hour listing all your debts in a spreadsheet, then list them from the smallest debt to the largest debt,” Mantilla said. “By focusing first on paying off the smallest debt, you'll get to a 'win' faster. You'll likely be able to pay off a few small debts before getting to the larger more daunting amounts. These smaller wins will give you the motivation to propel you through the larger debt payoff amounts.”

2. Goal: Stick To a Budget

Why it’s hard to do: “As we’ve seen this past year, life is unpredictable and creating a budget can help safeguard you from some of the uncertainty,” said April Schneider, head of consumer and small business products at Bank of America. “But, if you set a rigid budget and never change it, it may not remain relevant from one month to the next as your income and expenses fluctuate. Even more so, when it is safer to travel and dine out without restrictions, your spending habits may look different and you may find yourself spending more than anticipated in certain categories.”

How to do it better: “I recommend routinely adjusting your budget to maintain its effectiveness and using a rewards credit card that matches your spending habits to help you stay on track with your financial goals.”

Christopher Stroup, a financial advisor working for Abacus Wealth Partners, suggests handing some of the chores of budgeting over to software to see better success. “Some of our favorite resources, such as Mint or You Need a Budget, allow users to link all of their accounts into a central financial hub,” Stroup said.

“From there, the software can suggest a budget given your historical spending. One of my favorite tricks is to teach the software to recognize certain expenses and put them in the proper budget category I have created. Moving forward, this saves me a tremendous amount of time as I no longer have to itemize my expenses by placing them in the appropriate spending bucket. The software does this for me, which gives me more time to understand where I met (or missed) my budget goal for the month.”

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/7-steps-financial-wellness-2021-120041798.html