MarketWatch recently reported that 66% of Americans feel that they are living paycheck to paycheck, and 49% consider themselves broke. In the same survey, it was revealed that on average, Americans feel like they need $17,430 in savings to feel financially secure.
The survey also revealed that respondents felt that earning a $73,785 salary would make them feel secure. This means most Americans don’t feel their salary is sufficient, as the average salary is just $61,659.
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A lot of these financial insecurities can be attributed to debt. The country’s total household debt is at an all-time high, coming in at more than $17.5 trillion, according to the Federal Reserve Bank of New York. Americans are struggling to pay off their mortgage, student loans and credit cards now more than ever before.
If you’re in the same boat of feeling financially insecure and looking for ways to pay off your debt and achieve those goals you set back in January, here are 10 money moves from financial experts to help you get back on track.
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Start Budgeting
Although you might already be doing this, James Allen — CPA, CFP and founder of Billpin — said the first step to financial stability is creating a budget.
“It’s like a financial GPS, guiding you to your destination,” he said. “The 50/30/20 rule is a good starting point, allocating 50% of your income to needs, 30% to wants and 20% to savings. It’s like a diet for your wallet — you need to know what’s coming in and what’s going out to maintain a healthy balance.”
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Embrace a Spending Fast
“Consider a ‘spending fast,’ also known as a no-spend period,” said personal savings guru Mary Hines Droesch, head of consumer and small business products at Bank of America. “This technique allows you to control and understand your spending by cutting off any non-essential purchases for a specified length of time — a week, month, etc.
“Although it might seem daunting, think of it as putting your spending on an elimination diet to see what you truly need and what you can live without. It’s an opportunity to gain a deeper understanding of your spending patterns and develop a healthier relationship with money.”
Set Goals
Sean Fox, president of debt resolutions at Achieve, said it’s easy to become overwhelmed by inflation, rising interest rates, debt and lack of savings, making it seem like the perfect financial storm.
“Set a cornerstone with establishing goals, with family and/or spouse/partner as applicable, to know where you want to go — i.e., what you really want to do in your life,” he said. “These goals, both short and long term, will modify throughout life, but will guide finances, up confidence and ease stress. Goals might include everything from buying a new appliance to taking a vacation, buying a car or house, retirement and even having the time to pursue a favorite hobby.”
Paying off a credit card or your student loans can also be one of your goals, which can help relieve financial stress and open up opportunities for putting money in savings.
Make Savings Automatic
“From your budget, determine what you can save each week or month,” Fox explained. “It might be very small, but that’s OK; start somewhere and build. Then set up automated savings with your employer — many let you specify an amount to deposit into a savings account with each check — or directly with your bank or credit union, and transfer from a checking account to a savings account.”
He added, “Saving even $50 a month will give you $600 in a year — enough to avoid reaching for the credit card when an unexpected expense comes up.”
Understand Options To Deal With Debt
“If you do have debt, use the budget and decide if you can pay it off on your own using the avalanche or snowball method,” Fox said. “Otherwise, a personal loan may help to consolidate and pay off debt.”
Another helpful option for those with good credit is a balance transfer to a low- or zero-interest credit card.
“Credit counseling firms offer debt management plans to offer slightly lower interest rates on credit cards. Finally, consumers who have suffered a real financial hardship and cannot make minimum payments can look into debt settlement. The American Fair Credit Council is one resource to learn and find out about debt settlement and credible providers,” he concluded.
Try Negotiating with Creditors
If you have a significant amount of credit card debt, Moulik Jain, a financial expert and head of marketing at CaptainBiz, said you can try to explain the situation to your creditors and see if they can help ease your payment in some way.
“It’s important to communicate with your creditors. Many creditors will do what they can to help a consumer if they need only to know their situation, and some may even provide a lower interest rate or alternative payment plan for immediate relief and more manageable payments.”
Be Aware of How You Got Into Debt
Melanie Musson, a finance expert with InsuranceProviders.com, said you’re bound to get into debt again if you don’t know your motives for how you got into it in the first place.
“Is it that everything costs more, and your paycheck hasn’t kept up? Have you made purchases that were unexpected? Once you identify why you’ve gotten into debt, you can devise a plan that addresses the kind of overspending that has happened,”she explained.
Generate Additional Income
“For someone who has debt, who is concerned about lack of retirement savings and who is — justifiably — worried about inflation, the reality is that they really may not have enough income to deal with everything,” said Fox.
“Many people in this situation today are taking advantage of the high rates businesses are often paying part-time employees. Others are leveraging the gig economy and earning more money by doing anything from pet or lawn care to tutoring to consulting. It’s not for everyone, and it’s not easy, but when there’s truly a lack of income, there’s no magic bullet.”
Contribute to Employer-Sponsored Retirement Plans
“If you work for a company that offers any type of retirement savings plan, try very hard to contribute to this, at least somewhat, while taking care of debts and building at least some emergency savings,” recommended Fox. “Moreover, if your employer matches any part of your contributions, it’s additional savings to you — at no additional cost.”
Have Patience With Yourself
Maya Sudhakaran, head of growth and acquisition at Plynk, said that if you find yourself getting off track with your finances, you should try not to dwell on it because everyone experiences it at one time or another. Instead, she said to acknowledge it, reflect on it, and set your sights on what you can do tomorrow, next week or next month to further your financial goals.
“What matters more in the long run isn’t that you missed a milestone or delayed making moves, but that you started in the first place,” she said. “Try to get back on track as soon as you can, because any progress, no matter how small, can add up over time to create [a] big impact.”
Cynthia Meason contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: 10 Tips To Get Back on Track With Your 2024 Money Goals Halfway Through the Year
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