Financial Priorities: The Basics
Fall is officially under way. With each changing season, it has always felt to me like an opportunity to start fresh or revamp areas of my life. Recently a colleague and I visited our alma mater, Texas A&M University (whoop!) to share our experiences with a group of first-generation college students who were also starting a new chapter of their lives as college freshmen. As a first-generation college student myself, I quickly remembered what it felt like to walk on to campus for the first time and hope that I was making the right choices for my future. For anyone else walking through this life stage change, or simply wanting to revamp their financial priorities, here is a fall to do list to get you started.
Begin or review your monthly budget: Budgets get a bad rap as being overly complicated and stringent, but they do not have to be. When it comes down to it, a budget is simply calculating how much money you have coming in versus how much money you have going out. If your end number is positive (a surplus), you are living within your means and potentially have funds that you can consider investing for your future goals. If your end number is negative (deficit), you should look further to see where you may be able to cut expenses. Do you have subscription services that auto draft each month that you don’t use? Are you spending money eating out when you could be spending less by eating at home? The decisions may not always be this simple, but having a grasp of your monthly spending is crucial to your financial success.
Establish or replenish your emergency fund: An emergency fund is simply what the name implies: funds saved in case of an emergency. Your definition of an emergency and someone else’s may look different (I can assure you a vacation is not categorized as an emergency, though), but you will be thankful you’ve saved these funds when an emergency comes your way. In a recent study conducted by Empower, 37% of Americans do not have the funds saved to cover an unexpected expense over $400. Consider working towards saving three to six months of your living expenses in your emergency fund.
Check your credit report and begin building GOOD credit: Your credit report can do more than just show lenders your credit history. From impacting your living to employment situations, your credit is not something to take lightly. Companies like Credit Karma will allow you to see your credit report for free without running a hard inquiry that can impact your credit score. If you find your score is less than ideal, identify the areas that may need to be improved. For people that are young, time and payment history may not yet be on your side. Consider setting up a small bill that you are already paying (i.e. utilities, cable, internet, etc.) on a credit card to begin building your credit history. If your score is impacted by how much debt you have, consider prioritizing paying down your debts and not financing more that you can realistically pay off monthly.
None of these items are overly complicated or a quick path to success, but they are critical to your success for years to come. If you are just starting out or simply looking to start anew, know that it’s never too late to try to improve your financial situation.
Published in the Victoria Advocate.
Sara Potts is a CFP® professional and Lead Advisor with Keller Wealth Advisors.
