Fine-Tune Your Finances

In need of a personal finance makeover? Try these three steps to freshen up your money management.

By WP BrandStudio

Americans care deeply about personal finance, but there are clear signs that many could use help when it comes to the details of managing money. Recent polls suggest that the number of Americans who rate their finances positively is down. And there’s definitely an advice gap when it comes to learning about personal finance — more than 60% of Americans say financial education should be prioritized in schools in much the same way that math, English and science are.

But while the learning curve might seem steep, financial professionals say that a few strategic tweaks can help anyone get better at managing their own money — whether you’re brand new to the world of personal finance, or are looking to brush up on existing skills. And, experts say, the best time to dive in is right now.

“Just get started!” urged Roger Ma, a certified professional planner and author of “Work Your Money, Not Your Life” who emphasized that money management is a tangible, learnable skill.

“No situation is too complicated—and no problem is too large—that you can’t tackle it, if you take it in baby steps,” he said.

Why it can be difficult to get financial advice

The hectic pace of everyday life means many of us lose track or simply forget to keep an eye on our daily spending and budgeting. 65% of Americans say they don’t know how much they spent last month, while 25% say they don’t know what the interest rate on their home mortgage is — all crucial information that can cost you in ways big and small.

“People have a lot going on,” said Ma. “The last thing that you want to do after working a grueling week is to go figure out your finances. So even those with the best intentions might just kick it down the road.”

Lack of time isn’t the only issue, however. Access to financial advice has been a long standing roadblock, too.

“There’s this perception that you have to have money to get financial advice, so it’s kind of a Catch 22,” said Kristen Euretig, a certified financial planner and the founder and CEO of Brooklyn Financial Plans. “How do you get money if you don’t get advice about how to build wealth?”

If you believe your finances could benefit from a tune-up, here are three starter steps to freshen up your budgeting and savings strategy.

Step 1: Make a financial “personal report card”

The first step experts recommend is to assemble what Ma calls one’s “personal report card.” It is a step he urges everyone to take regularly, even if they are already adept at managing their money, as it can be a useful reality check.

“It’s a mix of three key metrics,” Ma said, “Your net worth (which is your assets minus your liabilities), how much you spend on a monthly or annual basis and in what categories, and then your credit reports and credit score.”

“It’s not difficult!” Ma said. But it does take time. He recommends blocking out an hour on your calendar on a weekly basis to sit down and dig into your own information.

Step 2: Create a budget that you’ll truly stick to

Another critical step is to establish a cash-flow plan, Euretig said, which is essentially a budget. Ample evidence shows that simply having a plan can make a huge difference: 80% of people who have a plan pay their bills on time and manage to set money aside every month, as opposed to only 40% of people who don’t.

And the best budget truly is one that you will stick to. “There are a lot of apps out there to help with budgeting. I don’t necessarily recommend one or over another,” Euretig said, adding that pencil and paper work just fine, too.

Various planners and websites promote specific budget percentages that may be useful, but ultimately there aren’t definitive rules about what portion of your budget must go toward, say, housing versus food. What matters most is the bottom line: “Make sure you are earning more than you spend, however you can get to that,” Euretig said.

Step 3: Plan for big life events and larger goals

At the same time that you are establishing concrete plans for daily spending, it is equally important to step back and consider your larger goals. Think of it as an exercise in financial soul searching, which should guide you in the long term.

“There really is a balance between your personal life, professional life and financial life — and being honest with yourself about what you want,” Ma said.

If there is a major life change on your horizon — such as getting married, having a baby, or buying a home — now may be a good time to find a financial planner who can take a more hands-on approach or simply spend an hour or two with you offering some targeted guidance. Many Americans are juggling multiple goals, such as paying down debt and spending less, and financial professionals can offer strategies for balancing those, while also offering the nuances of more complex financial issues like stock market investing.

“There are so many different ways to access advice now, and there are a lot of younger advisers starting out and trying to reach different populations,” Euretig said.

Ultimately, whether you turn to a professional for money advice or opt to DIY, what matters most is facing your finances head-on, rather than avoiding them.

“It’s really about figuring out where you want to go with your financial goals,” Ma said, “then making a plan so you can have a more proactive — rather than a reactive — approach to your financial life.”

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