We’re all at different stages in our financial lives. Maybe you’re a new graduate just starting your career. Perhaps you’re just getting back on your feet financially after experiencing a hardship. Or you may have decades of experience but finally be ready to go all-in with some new financial goals.
Even if you're in good shape financially, anything you can do to improve is a boon. Having more financial security increases your options, gives you more peace of mind, and helps you get closer to accomplishing your goals. In this post, I’ll give you 3 simple actions to take right now to improve your personal finances.
Action #1: Get in touch with your future self
One of the reasons the majority of Americans are woefully unprepared for retirement is because we have trouble visualizing the future.
We forget how quickly time passes. We underestimate how much small decisions and everyday actions impact our finances decades from now. We don’t identify with the older person we will become one day.
To get in the right frame of mind to feel more in touch with your future self, use an app to age your face, like AgingBooth or Face Retirement. It's a little scary to see, but it really does help you imagine being decades older.
An interesting behavioral study put test subjects in an aging simulation where they could interact with their virtual future selves and then answer questions about money. Not surprisingly, the participants who felt more in touch with their future selves were willing to save more for retirement.
When you can't link your present and future selves as being the same person, you make decisions about the future as if your future self were actually another person. Likewise, when you feel connected with an older version of you, saving is easier because you’re setting aside money to help yourself—not giving it to a stranger or someone you don't believe will truly exist one day.
When you can't link your present and future selves as being the same person, you make decisions about the future as if your future self were actually another person.
So connect with your future self by imagining that you're retired and can no longer work. What would an older, wiser version of you say? Would he or she be happy and financially comfortable because you invested for retirement on a regular basis? Or would he or she be struggling to make ends meet and feel angry at you?
If you realize that you need to make important changes in your life and finances, the good news is that you still have plenty of time to change your future!
If you're not sure how much you need to save to achieve your retirement goals, check out the AARP Retirement Calculator. It's one of my favorite tools to make sure your finances are on track. You answer a series of simple questions and see how you'll fare in the future. Then you can adjust the results by changing variables like retirement age and the amount of income you want.
See also: A Checklist to Measure Your Personal Finance Success
Action #2: Create a don’t-do list
Most people keep some kind of running to-do list that they want to complete. Well, a don’t-do list can be just as powerful. It’s a list of everything you should stop doing because it takes up too much time, energy, or money.
For instance, you could focus on some specific anti-actions, like:
- Don’t buy anything that costs $100 before a 48-hour waiting period
- Don't buy a new car before you really need it
- Don't spend so much time playing video games
Some of my favorite don’t-dos are more philosophical ideas like:
- Don’t compare your financial situation to others
- Don’t take your ability to earn an income for granted
- Don’t be too busy to connect with your family and friends
Come up with a few ideas or concepts that you need to stop doing in order to make progress and improve your financial life. You might add them to the top of your to-do list and highlight or circle them so they stand out.
See also: A Blueprint to Prioritize Your Personal Finances
Action #3: Get started on an important task you’ve put off
Making the first move to begin something is the hardest part. But once you’re in motion and have begun, it’s so much easier to stop procrasting and complete the task, whatever it is.
There are probably several things that you’ve been putting off when it comes to your personal finances. They’ve likely been on your mind for a while, or even causing you a lot of stress, so you know exactly what I’m talking about.
I find that the longer I put something off, the easier it is to continue procrastinating.
Maybe you’ve been meaning to open up an IRA, check your free credit report, shop your insurance, create a last will, or make a list of debts to prioritize. Don’t get overwhelmed; just choose one important task.
There’s so much power in making yourself follow through on that one task. I won’t even ask you to complete it—just get started on it.
You know the saying, well begun is half done. It’s so true. Making the first move to begin something is the hardest part. But once you’re in motion and have begun, it’s so much easier to stop procrasting and complete the task, whatever it is.
Every year, my husband and I like to update our personal financial statement or PFS. It’s a simple spreadsheet that lists our assets and liabilities. The formulas subtract what we owe from what we own and recalculates our net worth. (If you’re interested in creating a PFS, I cover it in detail in my book Money Girl’s Smart Moves to Grow Rich.)
This year it kept getting put off, until we completed it last week, finally. I just reminded myself how important it is to monitor your net worth and scheduled time on my calendar for it.
What you’ve been putting off will probably take less time than you anticipate, and you’ll feel so much better and relieved to have the task behind you.
Remember that if a task isn’t on your calendar, it likely won’t get done. So block off time today, even if it’s just 15 minutes, to make a tiny move forward to improve your personal finances.
See also: 6 Essential Habits of Financially Healthy People
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