However, if you need help with any of them, it may be time to look closely at your finances and develop a plan to improve your financial health.
#1 - What Are My Financial Goals?
Without specific financial goals, you could work hard to earn money but not spend it wisely. Creating a clear picture of what you want to do with your money in the short and long term can help you make better financial decisions.
Financial goals can be specific or general and include things such as:
- Save $2,000 by the end of the year
- Build an emergency fund with three months of living expenses
- Pay off my debt
Create financial goals to motivate yourself and help you be selective with expenses and investments.
#2 - What Is My Monthly Budget?
Knowing how much money you earn and spend each month gives you the power to make informed financial decisions. A monthly budget is a helpful financial planning tool for managing your money.
Budgeting helps you track where your money is going and identify ways to reduce expenses and save money. You will know how much extra money will remain in your checking account at the end of each month so you can allocate the excess toward your financial goals.
Create a monthly budget to help improve your financial outlook.
#3 - How Much Debt Do I Have?
Not only should you ask yourself how much debt you have, but you should also have a plan to pay it off. When calculating your debt, include credit card debt, student loans, car loans, and mortgages. Know the associated interest rates to help prioritize paying off items with the higher interest rates first.
Once you identify all your debt, you may need to rework your budget to ensure you have a plan to reduce your overall debt. By managing your debt, you can improve your credit score and reduce financial stress.
#4 - What Is My Credit Score?
Knowing and regularly monitoring your credit report and credit score is essential. Creditors look at your credit score to assess your creditworthiness or the likelihood you will repay your debts and loans. Your credit score is based on your credit history and ranges from 300 to 850. The higher your score, the easier it is to get approval for personal loans or credit cards, and it will often allow you to receive a better interest rate.
Request your free credit report from annualcreditreport.com and scrutinize the information for any inaccuracies. Staying vigilant with your credit history helps protect your financial well-being and ensures your credit score accurately reflects your creditworthiness.
#5 - What Is My Retirement Savings Plan?
How will you know if your retirement savings are on track if you do not have a plan? Retirement planning ensures you maintain financial stability into your golden years, and the sooner you start planning, the better. Contribute to your employers’ 401(k) retirement plan or an IRA, establish retirement savings to hold cash windfalls, or establish a credit union retirement account to secure your financial future.
Make sure to include retirement planning in your monthly budget.
Keep Asking Questions
These questions are just the start of protecting your financial health. Other questions you should ask yourself include the following:
- Do I have enough money in reserves for an emergency?
- Where can I cut expenses?
- Can I afford a house?
Grow your financial literacy and better understand your financial situation and goals by continuing to ask yourself personal finance questions.
See our Advice Center Blog for more personal finance tips and tricks.