7 Steps to a Healthier Financial Future: Take Action Now
Saving more money was the most popular New Year's resolution in 2025 and the second most popular in 2026, according to Statista. But making a resolution is just the first step. To truly improve your financial health, it's time to get hands-on with some essential personal finance tasks. The beginning of the year, post-holiday spending and pre-tax season, is the perfect time to take control of your finances.
Here are seven actionable steps to get you started on a brighter financial future:
Budgeting Basics:
- Review and Reflect: If you already budget, now's the time to review last year's spending and set goals for the coming months. If you're new to budgeting, consider using a personal finance app. Apps like Copilot Money, YNAB, and Quicken Simplifi make budgeting efficient and accurate by analyzing your spending history.
- Track and Adjust: These apps categorize your spending, providing a clear picture of your spending habits. They can help you identify areas to reduce expenses, like dining out or entertainment.
Maximize Your IRA:
- Compounding Interest: Maximizing your IRA contribution early in the year can significantly boost your savings through compounding interest. For 2026, the IRS sets the annual contribution limit at $7,500 for those under 50 and $8,600 for those 50 and older. These limits may decrease if your income exceeds a certain threshold.
- Pay What You Can: If you can't contribute the maximum, start with what you can and plan to increase later. You can also contribute up to $7,000 for those under 50 or $8,000 for those 50 and older by the tax filing deadline (April 15) if you missed the previous year's contribution.
Review and Adjust Retirement Plans:
- Set-It-and-Forget-It No More: Regularly review your retirement accounts and savings plans, like 529 plans. Adjustments based on income, retirement age, and risk tolerance are crucial. What worked when you were 28 might not be ideal at 45.
Credit Report Check-Up:
- Security and Accuracy: Reviewing your credit report is essential for both security and accuracy. It lists your financial history, including accounts, payment history, and potential fraud. Check for errors and take action if needed.
- Bureau Access: Access your credit reports from Equifax, Experian, and TransUnion weekly for free through AnnualCreditReport.com. This frequency is allowed by law, but be cautious about frequent checks unless you have a specific concern.
Credit Score Boost:
- Understand Your Score: Your credit score reflects lenders' views of your repayment ability. Tools like WalletHub provide detailed score analysis and a Score Simulator to predict how financial actions impact your score.
- Targeted Improvement: WalletHub reports your TransUnion Vantage Score 3.0. While other scores exist, they are based on similar criteria. Regularly checking your score can help you understand your financial standing and make informed decisions.
Verify Social Security Statement:
- Annual Review: Review your Social Security statement annually at SSA.gov. This statement lists your earnings history, which is crucial for estimating retirement benefits. It also provides a customized table for estimated monthly payouts at different retirement ages.
- Error Correction: If you spot an error in your income list, address it promptly to avoid potential delays and complications in correcting it.
Cancel Unwanted Subscriptions:
- Subscription Audit: According to CNET, the average American adult spends $90 monthly on subscriptions, with over $200 wasted on unused ones annually. Review and cancel unnecessary subscriptions.
- Annual Savings: For subscriptions you use frequently, consider paying annually to save money. This strategy can significantly reduce your overall spending.
By taking these proactive steps, you can gain control over your finances, make informed decisions, and work towards a more secure financial future.
