Why shouldn’t you be able to afford your dream car, buy a nice pair of shoes, treat yourself to a delicious dinner and still achieve financial freedom? The main difference between you and the women who live abundantly is knowledge! So with July officially upon us, now is the perfect time to review your finances for the year to ensure you’re still on track for financial success. Allocate time this week to review this list and continue evolving into the Financially Wise Everygirl you’re meant to be.
Take time to educate yourself about various financial topics. Schedule weekly money dates with yourself and spend a few hours managing your finances and reading financial books, blogs, or magazines. The more you know about your finances, the more confident you will feel about managing your money for the long haul. If you need even more support, consider hiring a Certified Financial Planner who can help you understand money and create a financial plan to help you reach your goals.
Check Your Credit Report and Credit Score
Your credit report is like a file on you and your credit history. It basically tells lenders how risky a borrower you are. So when it comes time to purchase a new home or new car, you want your credit report and credit score to be in top financial shape so you qualify for good interest rates. Get in the habit of checking your credit report and credit score at least annually, to confirm its accuracy. If you have not already done it this year, visit www.annualcreditreport.com to access your credit report for free once per year and then pay an additional fee to get your credit score. Simplify the process moving forward by setting alerts in your calendar to check your credit report and score around your birthday. That way you’ll always remember when to do it.
Create a Budget
Although this sounds very basic, many people have no budget in place to track their monthly income and expenses. It’s never too late to start budgeting as taking responsibility for how you handle your money every month will help you achieve your financial goals and live the life you dream of. You can use online systems like mint.com to track your income and expenses, or simply an Excel spreadsheet. Whatever budgeting system you decide to use, just make sure it works for you and your lifestyle. If you’re serious about cleaning up your finances and getting ahead financially, you must allocate time and energy to updating your budget every week. This will ensure you’re not spending more than you earn and that you’re able to save for your financial goals.
Automate Your Finances
Technology makes it super easy to manage day-to-day finances. Set up your finances so that a majority of the process is automated. You can use online bill pay or set up automatic transfers every month toward your bills. That way you don’t have to worry about whether you’re paying your bills on time or being charged late fees for late payments. If you’re concerned about having all your bills automated, set up corresponding calendar alerts to check your statements and payments to ensure accuracy. Also, strive to automate your savings every month. The more you can automate your finances, the less you have to worry about on a day-to-day basis.
Pay Off Debts
Mid-year is a great time to review your debt reduction strategy for the year and ensure you’re still on track to pay off your debts in the most efficient and effective way. Make a list of all your debts—car loan, credit cards, student loans, etc. Include the current balance, minimum monthly payment and interest rate. Then review your budget to determine how much money you can add toward additional debt payments. From there, you can do some more research on the best debt-reduction strategy to confirm you’re paying off your debts in the most efficient and effective manner. When working on debt reduction, it is important that you have an adequate cash cushion or money in the bank for any short term emergencies that may arise.
Continue Building Cash
Having a cash cushion is an integral part of your financial foundation. It allows you to use cash to pay for those random expenses or emergencies that arise in your financial life, instead of creating more debt or tapping into long-term investments. Strive to have a cash cushion of about six months of your committed expenses. With six months left in the year, determine how much you can save every month to continue building your cash cushion up to the desired level.
A recent study by Barclays Wealth and Ledbury Research shows women are more likely to make money in the market, mostly because they take a “buy and hold” strategy with their investments.* The study concluded that women have a greater desire for self-control and, therefore, once they understand investing and how it fits into their overall financial plan, they trade less and stay the course. In other words, women typically don’t try to time the market or get interested in the latest hot stock idea. Instead, they invest their money according to their goals and understand that, historically, the markets tend to reward those investors who stick it out and stay the course. So develop your financial plan accordingly and start investing today. Check out our past investing features for some basic investing knowledge to help you get started.
1. Study by Barclays Wealth and Ledbury Research, “Deflating News for Men: Women Better Investors,” Dubai Chronicle, June 2011
This post was contributed by Brittney Castro, CERTIFIED FINANCIAL PLANNER™, Founder & CEO of Financially Wise Women, a Los Angeles based financial planning firm for women. She specializes in working with busy professional and entrepreneurial women who are passionate about life and want to gain clarity around their money. Brittney’s mission is to help women plan and create the life of their dreams, free from anxiety about money. She has been featured in the Wall Street Journal, New York Times, Financial Planning Magazine, Investment News, and Registered Rep Magazine. Visit her at www.financiallywisewomen.com and follow her on Twitter @brittneycastro.
Brittney A. Castro is a registered representative with and securities offered through LPL Financial, Member FINRA/SIPC. California Insurance License #0F33895. Brittney Castro is not affiliated with The Everygirl.