Are you feeling stressed about your financial progress? Consider shifting your focus from the distance left to travel toward appreciating how much you’ve already achieved.
Here are several significant financial milestones that deserve recognition. If you haven’t yet reached these goals, don’t worry; we have some helpful strategies to guide you.
1. Settling Debt
Don’t wait until you’ve eliminated all your debts to acknowledge your progress. Paying off a single credit card or loan is a significant victory that can encourage you to continue on your path. This achievement may motivate you to clear additional debts more swiftly or enhance your savings.
If your debt repayment strategy feels stagnant, consider revising your approach for improved results. Start by vowing to never make just minimum payments and refrain from using your credit cards. If improvements are still lacking, think about transferring your balance to a new credit card with a 0% APR promotional offer, allowing you to confront your debt more effectively while avoiding high interest rates. Just ensure that you settle the debt before the promotional period expires. (Refer to: The Fastest Way to Pay Off $10,000 in Credit Card Debt)
2. Contributing to Retirement Funds
If you’re allocating a portion of your earnings to a retirement account before it reaches your bank account, take a moment to congratulate yourself. Not only are you increasing your 401(k), but you’re also reducing your tax liability. If your employer matches contributions, strive to contribute enough to take full advantage of this benefit and avoid leaving any free money behind.
Not yet contributing to your retirement or only contributing a minimal amount? To increase your contributions with the least discomfort, consider setting up an automatic yearly increase of one to two percent. For example, if you earn $60,000 annually, a 3 percent contribution translates to roughly $75 per biweekly paycheck. This amount is generally manageable, especially if you aim for an annual raise or promotion.
It’s easy to feel that your contributions are insignificant. Although growth may be slow initially, the effects of compounding will become evident over the years. (See also: 7 Easiest Ways to Catch Up on Retirement Savings Later in Life)
3. Receiving a Salary Increase
Whether you received an automatic pay increase or confidently requested one, congratulations are in order! To maximize this advantage, avoid ramping up your standard of living alongside your salary increase. Instead, keep living as though your paycheck remained the same. If you wish to indulge, set aside a small amount monthly for a year-end treat that won’t undermine your added earnings.
Feeling underappreciated at work despite your efforts? Remember that you may not receive a raise unless you ask for it. If your current employer isn’t willing to accommodate your salary needs, start seeking opportunities that offer better compensation. (See also: How to Negotiate a Raise Out of the Blue)
4. Enhancing Your Credit Score
Improving your credit score is a noteworthy accomplishment, especially if you have recovered from a challenging financial situation like bankruptcy or collections. Increasing your score requires commitment and effort, but once you’ve reached a healthier score, you can positively influence other financial aspects. This might allow you to refinance at lower rates on existing loans or obtain superior credit cards with better rewards. Additionally, a higher credit score could open doors to purchasing your dream home instead of only renting.
Hoping for an even better score? Improvement isn’t achieved through mere wishing. Use free resources, such as Credit Sesame, to monitor your credit score and identify factors negatively impacting it, such as missed payments or high debt levels. Be aware that many free credit reporting services utilize different scoring models (VantageScore) than lenders do when assessing your eligibility for loans. For a more precise insight into your credit health, consider purchasing your FICO score or requesting your score from one of the major credit bureaus (Experian, Equifax, or TransUnion) for roughly $19. (See also: Is It Worth Paying for Your Credit Score?)
5. Embracing a Frugal Lifestyle
This is a financial achievement anyone can take pride in, regardless of income level. Living more frugally can involve everything from swapping meat for beans and rice several times a week to saving $20 weekly in a savings account or purchasing a second-hand kitchen table instead of splurging on a new one. Celebrate every time you choose a less expensive option or prioritize saving over spending.
Adopting a frugal mindset in your daily life is quite straightforward. For example, packing leftovers or pantry items for lunch instead of buying a $7 meal each weekday can save you about $35. Similarly, hosting friends for a game night rather than heading out to a bar or movie could save you between $20-$50.
A great first step toward living frugally is examining your budget to pinpoint your largest expenses. Once identified, brainstorm creative ways to reduce these costs and implement them. You might also consider directing any savings toward debt repayment or a savings account, where it can accumulate. (See also: The Only 6 Rules of Frugal Living You Need to Know)
Instead of focusing on where you wish to be financially, take a moment to appreciate how far you have come. Have you saved more this year compared to last? Reduced your debt? Increased your earnings? Take pride in your achievements and aim for even greater financial wellness in the coming year.
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