If you’ve hit a rough financial patch, moving forward can be a challenge. But luckily, it is entirely possible to turn over a new money leaf. A financial fresh start could be exactly what you are looking for in 2022.
Are you looking for ways to improve your financial outlook this year?
We’re partnering with Bright to help you explore the top ways to start fresh in the months ahead. Bright is an AI-powered money tool that will help you pay off debt and save for the future. Sign up and start a 10-day free trial here >>
Ways To Get A Financial Fresh Start
Here are some ways to help you move your finances in the right direction this year.
1. Take Stock Of Where You Stand
Before turning over a new leaf, you need to evaluate your current financial situation. Without a clear understanding of where your finances stand, it can be difficult to mark your progress or know what to do next.
To get started, track your spending to find out where your money is going. It’s possible you’ll immediately spot some places to make changes.
Additionally, take the time to survey the bigger picture of your finances. Determine your net worth by adding up all of your assets and liabilities. In some cases, your net worth might be better off than you thought. In other cases, this exercise will be a brutal reality check.
Regardless of where you stand, it's important to see for yourself what the numbers say about your situation.
2. Evaluate Your Priorities
After you’ve taken the time to see where your finances stand, it's time to evaluate your priorities. Consider what you like and don’t like about your current money set up.
Consider what you are okay spending money on and what needs to change. For example, if you find that your take-out food consumption fills up too much of your spending, then it's probably time to start making some adjustments.
Beyond the day-to-day, consider what your long-term financial priorities are. A few common financial priorities include saving enough to have a comfortable retirement or building up enough savings to cover a down payment for a home.
Everyone will have different financial priorities. Take the time to really think about what matters to you. The priorities you determine will guide the next steps of your financial journey.
3. Build A Budget
With a clear understanding of the current state of your finances, it is time to build a budget. A budget that works for you should be realistic for your income. Plus, it should keep your financial goals in mind for your future.
In most cases, creating a budget will involve cutting back on certain expense categories. For example, you might decide to put a more reasonable cap on your discretionary spending. With that cap in place, you can choose to prioritize other financial goals.
If you need help building a budget, then check out our full guide.
4. Pay Down Debt
If you have debt of any kind, it can be a drain on your whole financial picture. But this is especially true if you have credit card debt. That’s because credit cards are often associated with notoriously high interest rates.
When high interest debt is a part of your financial picture, paying down those loans should be one of your top priorities. Any available funds in your budget should be funneled towards this draining cost.
But what if you could pay off your credit card debt faster with the help of automation? That's entirely possible with the help of Bright’s MoneyScience system. The AI tool will study your finances and make the most of your available funds to pay down your credit cards. According to Bright, the system can save you around $750 on fees and interest charges each year.
5. Automate Your Savings
Saving for your goals is a key part of any financial fresh start. But it can be easier said than done to tuck away savings.
Luckily, Bright offers an easier way to stick to your savings goals through their automated savings tool. That’s right! You can set up your savings goals and put them on autopilot. And Bright will take care of building your savings goals automatically each week.
On average, Bright users increased their annual savings by $774 in 2021! Imagine what this powerful tool could do for your savings.
6. Work On Your Credit
A good credit score can open the door when you are ready to make major purchases. Not only can a good credit score allow you to take out the loan in the first place, but also potentially save you thousands on interest payments over the life of the loan.
For example, let’s say you want to purchase a home. That’s an exciting step! But most lenders are going to want to see a solid credit score.
You can take steps to boost your credit by paying off debt and making on-time payments. But Bright can give you a helping hand through Bright Credit Builder. The tool will automatically help you make on-time payments and lower your credit utilization rate. Both of these actions should lead to a higher credit score over time.
Every journey has bumps in the road. And the process of making a fresh financial start is no different. You are bound to encounter bumps on your road to a place of greater financial security. But taking action now is better than waiting.
Bright is a financial tool that can help clear the way for a fresh financial start this year. Why not take action by signing up for this finance-saving tool today? New users can get a 10-day free trial to check it out. Sign up for Bright here >>
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.