When we think about cleaning, we often start with our closets, garage, or attic. But it’s important to regularly get your finances cleaned up and in order.

Set Financial Goals

You might be surprised to hear that only 3 out of every 100 adults write down their goals on paper. This is also likely the reason that many Americans say they haven’t reached their goals. It’s proven that you are far more likely to reach your goals if you write them down and share them with others. When setting goals, consider these items:

• Large upcoming purchases, such as a new home or a car
• Debt, including how and when you plan to pay it off
• Retirement and contributions to a 401(k)
• Children’s Education Savings Account
• Long-term goals, such as milestone vacations

We recommend making your goals using the SMART method, with each goal being specific, measurable, attainable, relevant and time-bound. Not all goals are the same! Your short-term goals will take about 6-12 months to accomplish, while your long-term goals will usually take more than a year.

Kickstart Your Savings

A savings account is the backbone of any well-balanced budget. However, 4 in 10 adults don’t have the funds to cover an unexpected $400 expense. You may have just begun to save, or maybe you’ve been  saving for years now. No matter what, it’s important to keep growing those accounts.

As you kickstart your savings, create categories for your savings accounts and label these accounts with the names of your savings goals. Then, think about how much money you will need in an emergency fund. Starting with just $1,000 is a great first goal, however, depending on your situation you may need to save much more.  Use these questions to get started saving:

• Are your monthly payments affordable?
• Have you split your direct deposit to put money into savings?
• Where can you cut back from existing expenses?
• How can you limit impulse purchases?
• Can you cut back on how often you go out to eat?

Understand Your Credit

Your credit score is one of the most important numbers in your life. Not sure what your score is? You can review it each month through Elements online and mobile banking. Your FICO score ranges from 300 to 850. The higher your score, the better credit you have. Your FICO score plays a large part in lending decisions at financial institutions.

Your credit report tracks how you manage your obligations over time. This document is an important part of your life as financial institutions use this to decide who they will lend to and what loan rates you will receive. There are three major credit bureaus: Equifax, Experian, and TransUnion that create these reports.

It’s important to review your credit report regularly. You should look over this report at least once per year. Visit annualcreditreport.com for your free copy. Review this to look for errors and be aware of what it says before making large purchases. It’s important to report any fraud quickly to the credit bureaus.

Manage Your Debt

Consumer debt in America now totals about $4.1 trillion, with the average household having more than $8,500 in credit card debt alone. Because debt is a reality for so many families, it’s important to understand how to responsibly manage your obligations.

When creating the plan, remember that repaying your debts can be done strategically. We recommend either a “debt snowball” or a “debt avalanche.” Both methods work similarly, and we recommend paying the minimum payment on all debts, except for the one you are focused on. The debt snowball strategy involves focusing on paying off your debt with the smallest balance. With a debt avalanche, your focus debt is the one with the highest interest rate.

As you work through your plan, try your best to live solely on your income. Begin using your debit card, rather than credit cards, and stop taking on new debt immediately. One of the best ways to avoid future debt is learning to say “no” to things that you don’t need.

Ramp Up Your Retirement

Planning for your future is critical, however, 80 percent of Americans have no idea how much money they'll need in retirement.

It’s easy to get started:

• Be sure you are taking advantage of your employer 401(k) match
• Increase your contribution if you get a pay raise
• Allocate money from your tax return to contribute to a specific retirement savings account
• Meet with an Advisor to ask questions and build a customized plan

As you continue to work through improving your finances, our team is here to support you with any of your questions and needs. Contact us today for expert advice.

Sources: CFP Board | Lexington Law | Washington Post | Goal Brand

This information is provided for informational purposes only. It does not constitute legal, tax or financial advice. Consult with your tax, legal or financial adviser before taking any action.