Money can’t buy happiness — but it certainly helps.
And if you’re like the nearly 88% of Americans surveyed by USA TODAY Blueprint, then you’d agree that your happiness — and future plans — are bound to your financial wellbeing.
However, having enough money to retire, travel and enjoy the good things in life can feel like a distant dream for many Americans.
But you can start laying the foundation of a stable financial future. Start by following these basic steps, and watch your future goals come closer to your reach.
A note on financial stress and mental health
Money can be emotionally fraught, even if you’re in good financial shape. When making a plan for the future, establishing sustainable habits can be the difference between success and failure.
Schedule a financial date with yourself once a month — treat yourself to lunch, grab your notebook and review where you’re at (and want to go).
While you should confront your debt, you shouldn’t get down on yourself about it. Financial experts say shaming yourself into change likely won’t make it permanent.
Be open about your plans with people you trust: It’s easier to hold yourself accountable when you have the support of loved ones.
Step 1: Make a Budget
How much do you spend in a month vs. what you earn? The answer is essential to any plans you might make.
Your budget should focus on what’s happening in your financial life right now, focusing on essentials like:
- Food
- Housing
- Insurance
- Transportation costs
Create an accurate financial plan by reviewing the last 3–6 months of expenses. Calculate the median monthly cost for each essential expense, and use those numbers to plan for the next 3–6 months. And remember: Keep your budget honest by reviewing and updating it every few months.
What if I’m financially stable and have debt?
It’s not uncommon for people who have a solid financial foundation on paper to also carry the burden of debt. If you feel like getting out from under your balance seems impossible, you might want to think strategically.
Some debt consolidation methods impact your credit score in the short term. But if you have no need for a “good” credit score in the near future, you might want to weigh the immense cost and time of making minimum payments vs. a quicker approach. Breaking the minimum payment cycle — and the mounting interest that comes with it — could save you money in the long term.
Step 2: Dream Big
What do you want your future to look like, and what will that vision cost? Whether the dream is homeownership, early retirement, travel or something else, you’ll need money.
Take each idea and create a SMART goal. It’s a proven approach to planning that places your dreams squarely in reality.
For example…
You and your partner dream of buying a home. The SMART planning approach would be:
| Specific | You decide where you’d like to live, what sort of home would work for your lifestyle and your projected budget, based on market conditions. |
| Measurable | You plan to check in quarterly on your down payment savings schedule, with the goal of having $50,000 in the bank within three years, and more than $80,000 within five. |
| Achievable | Based on your present financial situation, you know that you and your partner can afford to save around $1,400 per month, making your savings schedule and budget feasible. |
| Relevant | You know that buying this home will help you achieve financial goals like building equity and having stable housing for the rest of your life. |
| Time-Bound | Enacting a five-year saving and planning strategy means you will be able to put more towards your down payment, reducing your future monthly mortgage payments and affording you more flexibility to invest down the line. |
Step 3: Find Common Ground
Ever look at a menu and struggle to choose a dish because everything sounds good? You might feel that way after putting your dreams down on paper.
Prioritizing your financial goals can seem impossible. How do you make concrete decisions based on subjective criteria? Save for a new car or a dream vacation? It’s scary to think you could be sacrificing the “right” thing in favor of an inferior choice.
But here’s the thing: You might not have to choose.
Try identifying how your goals could complement each other, even if you can’t start saving for the bigger ones now (or even in the next few years).
Picture this:
You dream of going on safari in Tanzania, but know that isn’t at the top of your priorities list. However, some of your other goals could support your far-out fantasies.
- Establishing a 6-month emergency fund can help you overcome periods of financial hardship and keep your dream trip on track.
- Building a stable career will make it easier to take significant time off down the line.
- Paying off unsecured debts (like credit cards and personal loans) sets you up for long-term financial health — and gives you the time to grow your savings.
By seeing your goals as compounding, it makes it simpler to understand which needs should come first. So get the basics down, and know that you’re laying the foundation for amazing things later.