The top financial improvement strategy recommended by CFPs in just 5 minutes.
If you want to improve your life, there will always be someone trying to sell you a quick solution. Whether it's getting in shape or being more effective at work, there's always a product or method being marketed as the solution.
Establishing good long-term habits and managing finances effectively require consistent effort and attention.
Financial planners offered their top advice for clients looking to improve their finances in just five minutes.
One piece of advice that consistently emerged was to determine where your funds are being spent.
"Signing up for a budget app and linking your bank and credit card accounts is a quick and easy five-minute tip from certified financial planner Kevin Coombs in Atlanta, Georgia. The data that starts coming in will be invaluable."
Why it pays to track your spending
A financial expert wouldn't attempt to help you improve your financial health without knowing your current financial habits.
Understanding your spending habits is crucial to achieving significant financial goals, such as saving for retirement or reducing debt, according to Tracy Sherwood, a CFP in Clarence, New York.
Tracking both numbers will give you a baseline for making future financial decisions, she advises.
Regularly reviewing your monthly spending for more than just the initial five minutes is necessary. If you use budget software, ensure that your linked expenses are being logged correctly and are categorized properly.
Tracking both major and minor expenses will help you keep a close eye on your account balance.
James Guarino, a CFP in Woburn, Massachusetts, notes that charges may seem small and insignificant when viewed individually, but they can accumulate over time and significantly impact your financial well-being.
By gaining a more detailed understanding of your spending, you can then ask broader questions about the overall direction of your financial resources, according to Coombs.
"What were your expenses like compared to the previous month? What factors contributed to the difference? Do you have any expectations for the upcoming month?" he asks. "Examine the reasons for higher-expense months and explore potential solutions to prevent them from happening again."
To achieve your financial goals, consider cutting back on unused subscriptions and dining out, which may be eating up more of your paycheck than you realize.
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