5 Key Steps to Strengthen Your Finances

It is never too late to take a fresh look at your finances and banking habits and see what may need to change to reach your financial goals.

Here are five facts to know and actions to improve your finances.

Adjust  your budget to ease the burden of inflation

You might not be able to control inflation, but an adjustment to your budget can help you ease the burden of skyrocketing prices and help you avoid savings shortfalls.

Take stock of where you spent money over the previous year. Credit cards and bank statements are good ways to break down the numbers.

Prioritize your must-haves, including rent or mortgage, groceries, and shoring up your emergency fund. Next, decide if any lower-priority expenses can be cut or reduced in the future.

If some of your necessary expenses increase in price, you will know you can still afford the things that matter most. Any extra funds can be used to update or create a concrete savings plan.

Make an emergency fund a top priority

You may have heard of the importance of an emergency fund, and if you haven’t set aside money in one, now is the time to start. You should have enough money set aside to help cover financial emergencies or setbacks.

Ideally, it would help if you had enough saved to cover at least three months’ worth of must-have expenses. The emergency fund should be kept in an easily-accessible account.

A sufficient savings balance can be beneficial for more than just financial emergencies. You should set up automated savings transfer from your checking account into a savings account to build up your emergency balance.

Make sure that your money is working for you by ensuring that you are earning the best interest rates. High-interest online savings accounts often offer the best rates.

Suppose you have an emergency account with a balance of three to six months’ worth of expenses. In that case, you may want to consider putting any additional funds into investments that have growth potential and will outpace inflation.

Avoid overdraft fees

The Consumer Financial Protection Bureau recently announced it would be “enhancing its supervisory and enforcement scrutiny of banks that are heavily dependent on overdraft fees.” At least one major bank that has recently announced an end to overdraft fees.

The bureau has said it could assess hefty penalties for institutions that commit illegal overdraft practices.

If your bank or financial institution charges overdraft fees, consider switching on one that makes it easier to avoid the fees.

Use banking apps easy for kids to use

Financial institutions and banks have recently rolled out banking apps explicitly designed with teens and kids in mind. If you haven’t helped your child sign up already, kid-friendly banking apps may be something to look into.

These apps can help children build their financial literacy. Giving kids a budget, and allowing them some responsibility for their shoes or clothing choices, for example, can help prepare them better for managing their finances in the future.

Many kid-friendly banking apps allow parents to transfer money electronically into the account and help them set savings goals.

When children see their account balance grow, it may help them decide whether or not to spend their money on a trendy purchase or save money to buy something more substantial.

Shop for a better bank

Investors should assess what money goals are essential and decide if their bank matches those values and goals. According to a recent online poll by The Harris Poll and NerdWallet, finding a financial institution that prioritizes environmental impact, racial equity, and community impact is essential to consumers when considering which company they want to do business with.

If your current financial institution does not share similar values or have programs that work for you, consider looking into others that may be a better fit for your needs.