Simple Changes That Will Help You Take Control of Your Finances
February is the month of love, but it doesn’t have to be reserved for love alone. This year, why not fall in love with your finances?
Imagine how liberating it would feel to have complete control over your money and watch your financial goals become reality. Developing healthy financial habits isn’t just about saving a few extra dollars—it’s about creating a life of stability and security. Here are seven financial habits you can embrace this February to rewrite your money story and set yourself up for success.
1. Find a Way to Make Budgeting Fun
Budgeting is one of those tasks that feel more like a chore than anything. But, instead of seeing it as a restriction, think of it as your personalized plan for achieving financial freedom while enjoying life along the way. If you make budgeting an enjoyable part of your routine, you’ll be more likely to stick with it and see results.
Here’s how to get started:
- Find the right tools: Begin by choosing a budgeting tool that fits your style—whether that’s an app like Mint or YNAB, a colorful spreadsheet, or even a bullet journal.
- Use frameworks to make it easier: Use the 50/30/20 rule as a framework. Allocate 50% of your income to needs, 30% to wants, and 20% to savings or debt repayment, and see how close you can stay to these targets.
- Add some creativity: Use stickers, color-coding, or playful visuals to make your budget feel less like a spreadsheet and more like a vision board for your goals.
- Turn it into a game: Set small challenges for yourself, such as spending less on dining out for one week or finding creative ways to save on groceries. Reward yourself when you hit these mini-goals.
While budgeting isn’t always the most fun, you can find a few ways to make it a bit more interesting.
2. Build Your Emergency Fund
An emergency fund acts as your buffer against life’s unexpected expenses—from surprise medical bills to urgent home repairs or even job loss. Having this fund can be a huge relief, allowing you to handle emergencies without resorting to high-interest credit cards or draining other savings.
Here’s how to start building your emergency fund:
- Set up automatic transfers: Set up automatic transfers from your checking account into a dedicated savings account to make saving consistent and effortless. Treat it like a non-negotiable bill you pay to yourself.
- Start small: Even $20 a week adds up over time. If your financial situation changes, you can gradually increase or decrease your contributions as needed to bolster your savings.
- Break goals down: Break your goal into smaller milestones to stay motivated. For example, start by saving enough for one month’s expenses, then work your way up to 3-6 months of living expenses. Celebrate each milestone to stay on track.
- Give your fund a boost when you can: Look for opportunities to give your fund a boost, such as using bonuses, tax refunds, or earnings from a side hustle.
Keep your emergency fund in a high-yield savings account to earn interest while it sits untouched. Revisit your progress every few months, and take pride in the growing security you’re building for yourself and your family. Knowing you have this cushion can make life’s uncertainties feel a lot less overwhelming.
3. Live the Freedom Of a Debt-Free Lifestyle
Instead of feeling weighed down by constant payments, high-interest rates, and financial stress, imagine what it’s like to have your hard-earned money actually work for you. A debt-free lifestyle opens doors to new opportunities—whether it’s saving for your dream vacation, investing in your future, or simply enjoying the peace of mind that comes with financial security.
While paying down debt can take a while, it will feel like a huge relief when you’ve worked to pay everything off. Here’s how you can start tackling your debt:
- Tackle high-interest debt first: High-interest debt, like credit cards, often carry the highest costs over time. Consolidate high-interest debts into a lower-interest loan if possible to simplify payments and save money.
- Track your progress: Keep track of your progress by using tools or apps that make repayment easier, and set reminders to avoid missed payments and late fees.
- Celebrate small victories: Celebrate every small victory, like paying off one balance, and use those moments as motivation to keep going. Redirect any extra income, such as bonuses or tax refunds, toward your remaining debt to accelerate your journey.
Take a moment to picture your life debt-free and use that vision to fuel your efforts. For now, consider cutting back on non-essential spending this month, such as dining out or subscriptions, and put those savings directly toward your debt. The sooner you make progress, the closer you’ll be to a life where your money belongs entirely to you.
4. Adjust Your Financial Goals Regularly
Your financial goals are a roadmap to your dreams, and they should reflect all aspects of your life. Regularly reviewing and adjusting your goals makes sure you stay aligned with your priorities and prepared for the future. Here’s how:
- Write down your goals: Write down short-term goals (1-3 months), such as saving for a weekend getaway, and long-term goals (5-10 years), like buying a home, building a retirement fund, or setting up a financial foundation for your children. Try making a vision board to visualize your goals and put it somewhere to remind yourself daily.
- Put your money in the right places: A high-yield savings account is ideal for short-term goals, while a 401(k) or IRA is better suited for retirement. If saving for your children, consider a UGMA account or a 529 plan to grow your money until they need it.
- Make your goals actionable: Include specific, actionable steps for each goal. For instance, allocate a portion of your monthly income toward a dedicated savings account for your child’s future.