When your finances get left unchecked, it doesn’t take long for it to become a tangled mess. Whether you’re overspending for the shiny new thing on the market or unexpected bills are plaguing your monthly budget, if you’re not planning properly – it’s time for a financial reset.
Research shows that most millennials (almost 66%), have nothing saved for their retirement. It’s a clear sign that Americans today don’t plan when it comes to their finances. This eventually leads to a loss of financial control and stability.
A financial reset helps you wipe the slate clean and regain control over your money. It gives you a chance to reevaluate your spending habits and make positive changes for your future.
With our help from Independent Financial Services, you’ll take the first big step towards solving all your financial troubles.
Here are ten steps to implement a comprehensive financial reset:
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Get Organized
Organizing your finances is step one for a smooth journey toward economic solvency. So make sure you gather all your important documentation no matter how big or small. It will give you a bird’s eye view of your income, expenses, assets and liabilities going further.
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Track Your Spending Habits
Instead of cutting expenses, Gen Z millennials are more focused on living in the moment. But if you want to avoid unnecessary expenses, that’s a mindset you need to avoid. Track your spending for at least a month, whether through an app or on a pen and paper.
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Identify Areas to Cut Back
With clarity over your spending habits come opportunities to cut expenses. Start looking for non-essential expenses such as restaurant meals, entertainment subscriptions, or even gym memberships that you’re not using. Even when you’re making small cutbacks, they add up and make a noticeable difference over your monthly budget.
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Create a Bare-Bones Budget
You’ve tracked your expenses and made cutbacks where needed. Now, it’s time to use your income and spending logs to create a strict, bare-bones budget that covers all your necessities.
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Build Emergency Funds
Building an emergency fund is not just a smart financial step but an absolute necessity to protect yourself from potential economic disruption and crisis. While maintaining your bare-bones budget, divert your savings into an emergency fund for at least 3 to 6 months.
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Diversify Your Income
There’s no end to the benefits of diversifying your income streams. Even when you have a steady job, consider expanding your investment portfolio to reduce any financial risk in the future. In other words – don’t put all your eggs in one basket!
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Clear Your Debts Strategically
If you’ve accumulated debts over the years spent without any proper financial plan, now is the time to pay them off. Identify the debts with the highest interest rate and focus on clearing them out first. Pay minimums on everything else.
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Renegotiate Bills
Renegotiate Bills For recurring expenses you can’t eliminate, call providers to negotiate a lower rate on things like cable, cell phone, insurance, etc. Companies often extend deals to avoid losing customers.
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Review and Update Your Financial goals
With your debts paid and expenses trimmed, it’s time to take a step back and reinvent your financial goals. Do you want to save for a house, or retire early? Or maybe you want to add some vacations to your yearly lifestyle. Now is the time to create a realistic budget that leaves room for both investments and luxuries.
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Consult a Professional
For complex financial situations like high debt levels or bankruptcy, consider hiring a certified financial planner or credit counselor to advise you and create a structured plan.
Work with Us
Completing a full financial reset takes discipline and patience, but frees you from the endless cycle of living paycheck to paycheck. Use it as a fresh start to build better money habits and work towards your long-term goals.
Schedule a call with us and let us help you take the right steps towards financial freedom.