1. Set financial goals

A good goal is exciting and can make your life better. Financially speaking, maybe it’s to buy a house, pay for school, or retire early. Or something as simple as embarking on your dream vacation.

French writer Antoine de Saint-Exupéry famously said: “A goal without a plan is just a wish.”

Because all these things require money to get them, be sure to figure out how you’re going to achieve your goal. Some ways include:

• Skip the ambiguity. Be specific in what you want to achieve.
• Be sure it’s a goal you really want.
• Start small with short-term objectives and gradually work your way up to bigger goals.
• Make your goals measurable, breaking larger ones into smaller ones that can be met in a reasonable timeframe.
• Attach a deadline to your goal. This says your goal is important, one you won’t forget about.
• Track your progress and adjust plans if needed.

By doing these things, you will help yourself stay focused, organized, and motivated.

For more tips, see the article “How to Prioritize Savings and Investing Goals,” which provides more tips and answers some common questions.

2. Make a budget

You’ll need the financial means to meet your goals. And it all starts with a budget. They are easy to create — with budgeting websites and apps or just a simple spreadsheet. As your income or spending habits change, so can your budget (with a few simple tweaks).

Here’s how to make a budget: First, calculate your monthly net income. Next, list your monthly expenses (mortgage, insurance, transportation, groceries, etc.) and savings. Then, list your fixed monthly expenses (i.e., utilities) and your variable monthly expenses (i.e., eating out). Once you do that, to figure out the average monthly cost for each expense, list the amount of money you spend on each. Some fixed expenses — such as a car loan — will cost the same every month. Other fixed expenses — such as groceries — will vary. To get an accurate representation of costs of fixed expenses that vary, like groceries, add up the total amount of money you spent on groceries over the course of three months and divide the total by three. Finally, compare your net income to your monthly expenses, and make any needed adjustments. Then, stick to the budget you’ve created.¹

3. Track your spending

One way to stick to your budget is by tracking the money you spend. It’s a good thing to do because you can see your spending patterns. There are a couple ways to do it — by using a budgeting app (with bill reminders) or a basic spreadsheet to track expenses. You can also set spending limits on credit cards, so you’re notified when you reach a certain amount.

By tracking what you spend, you’ll more easily spot your spending habits, and keep to your financial budget and goals.²

4. Manage debt

Debt is part of the American existence. In late 2023, Americans carried $17.5 trillion in household debt and $1.13 trillion in credit card balances, a record high. So it’s important to know how to manage it.³

As the old adage goes, “Knowledge is power.” To get your debt under control, you need to make an honest examination of all your debts. You can do this by simply listing type of debt (education, credit card, etc.), lender, total balance, interest rate, and monthly payment — for each debt. Then put into play a debt repayment strategy.

But before you do, you might need to tweak your budget just a bit. For example, can you reduce your eating out or entertainment expenses? After tweaking your budget as needed, decide on an action plan to help you move forward. What debt repayment strategy will you put into place?

Want to save the most money on interest? Then pay more than the minimum for the debt with the highest interest rate and just the minimum on all other debts — until eventually all your debts are repaid. This is called the avalanche method. Or you could opt for the snowball method, in which you pay the minimum on all debts while paying extra on the debt with the smallest balances. This method sometimes can keep people motivated longer.

You can pay off your debt quicker and decrease the interest you pay in a couple different ways — by increasing your payment each month or making a one-time lump sum payment. The results? You could save thousands of dollars in interest. Also, paying a monthly bill biweekly can shave off time and interest. For example, making biweekly payments on a $35,000 student loan with a 10-year repayment plan at 5% interest will save you over $1,100 in interest. And you’ll pay it off in just 9 years.³

If you have multiple credit cards, consider consolidating the debt into a personal loan at a lower interest rate.

For more tips, see the article “Managing and paying off debt.”

5. Automate finances

Most of us welcome ways to save time and make our lives easier. One way to do so is by automating your finances. Set up automatic payments for your bills each month. And be sure to pay yourself too by automatically depositing money into your savings account (whether it’s earmarked for your regular savings or emergency savings).

6. Emergency fund

Speaking of an emergency savings account, be sure you have one.

It’s ideal to have three to six months of living expenses squirreled away for unexpected expenses. Afterall, you don’t want to rack up more debt for an emergency expense when you’ve worked so hard to manage your debts.

That’s why it’s good to have liquid cash, so you don’t have to rely on high-interest credit.⁴

For tips on building an emergency savings account, see the article “Steps to Build an Emergency Fund.”

7. Get your credit report

It involves more than finding out your credit score. You want to check your credit reports annually to catch any fraud or errors, which could affect your ability to borrow money and your interest rates and potentially impact a job application. Go to annualcreditreport.com or call 877-322-8228 for your free credit report.⁵

There are many ways to train yourself to be financially fit. How many healthy routines you adopt is up to you.