How to Develop A Financial Recovery Strategy
Recovering from a financial crisis, reaching financial freedom, and building your credit are all possible … with the right financial recovery strategies in place. If you are looking to get your finances back on track and remain on track, consider developing and preparing these financial strategies:
SELF-REFLECTION
Take time for introspection, analyzing spending and saving behaviors, and pinpointing specific areas in your financial life that need attention. Use this reflection to establish personal commitments that can be the motivation for long-term financial freedom.
Brainstorm by asking yourself these questions:
What encourages you to develop a financial recovery plan?
What financial hardships are you experiencing now or in the past?
Can you stick to your budget—why or why not?
How much did you save last year?
IDENTIFY BIG GOALS
There are various methods to use when identifying goals, no matter which method you choose, writing down your goals can increase your chances of achieving them. Grab a planner to get organized with your future big goals!
Author, Mark McCormack, studied students in the 1979 Harvard MBA program, in which only 3% had written goals and plans. A decade later, he’d questioned the same students—revealing mind-blowing data on their earnings. The 3% of students who had written goals and plans had earned ten times as much as the 97% combined!
CREATE VISUAL INSPIRATION
Put sticky notes on a mirror, pin them to the bedroom door, on your nightstand, or any area/surface you see on a daily basis. Write positive affirmations, inspirational/spiritual quotes, or goals—staying motivated matters!
Make your vision come to life with a poster or “look book” filled with inspiring collages. For more “DIY” fun, gather unwanted magazines to cut & paste photos, or stop by a local craft store for art materials: such as markers, paint, construction paper, glitter, etc.
BOOST YOUR CREDIT SCORE
Your credit score is determined by five components, with each financial habit making up a certain percentage. Paying off credit card balances/debt, making timely payments, and fixing credit report errors improves credit scores overtime when managing your finances.
Advantages of a good credit score include: low interest rates on credit cards/loans, avoiding security deposits, easier rental-approval for houses/apartments, more negotiation-power, and more!
KEEP TABS ON YOUR CREDIT REPORT
Checking your credit report everyday isn’t necessary, but your goal is to get to and stay within a healthy range. Don’t stress about minor fluctuations, credit scores change day-to-day, instead focus on trends. You’re entitled to a free credit report from all three major credit report bureaus once a year: Equifax, Experian, and TransUnion. Taking advantage of this free report annually can help you spot inaccuracies and fraud activity, while tracking your progress for long-term encouragement.
UPDATE YOUR BUDGET
Review your monthly budget to adjust savings amounts by removing unneeded expenses. This savings can be applied towards reducing your debt or to increasing your rainy-day and long-term savings. Set reminders/alerts for your bill payments in your planner or cell phone’s calendar. Consider setting up auto-pay for important bills, which is perfect for remembering to pay on time and boosting your credit score.
MEET WITH AN EXPERT TO DISCUSS YOUR GOALS
Getting on track and staying on track can be overwhelming, but doesn’t need to cause distress. Where should you turn for assistance? Definitely not credit repair scams.
Speaking face-to-face with a financial professional to create a recovery plan or for a better comprehension of your expenses and income can help ensure you’re piecing together a plan to manage your savings/debt. Financial professionals, such as those at the credit union, will share expertise and discuss your entire financial situation in depth as well as share free educational resources.
