Financial Reset

5 Steps to a Financial Reset

If you are ready to improve your financial wellness, we recommend periodically analyzing and resetting your money allocations. A financial reset is a great strategy to make sure your financial goals align with your spending and investments. In this article, we will share ways to give your finances a fresh restart so you can ensure a secure and prosperous future. 

What is a Financial Reset?

A financial reset is a strategic approach to evaluating your financial situation and making changes for improvement. It involves a comprehensive review of income, expenses, savings, investments, and debt while realigning your priorities to ensure long-term financial stability. 

5 Steps to a Financial Reset

1. Reassess Your Budget

Begin your financial reset by revisiting your budget. Analyze your spending habits and identify areas where you can make adjustments. Does a majority of your excess spending go toward a specific category like dining, shopping, or entertainment? Allocate funds based on your current priorities, ensuring that essentials like savings, debt payments, and investments are prioritized. A well-structured budget is the foundation of financial stability.

Additionally, we recommend improving your financial education. Knowledge is power when it comes to financial wellness. Take the time to educate yourself on personal finance topics, investment strategies, and market trends. You can attend workshops, and webinars, or seek guidance from a financial advisor. Making informed money decisions will positively impact your financial future. 

2. Check Your Emergency Fund

Another important step to a financial reset is revisiting your emergency funds. We recommend having at least 3-to-6 months’ worth of living expenses set aside in case an emergency arises, like an unexpected job loss or medical bills. Having this financial buffer provides peace of mind when unforeseen expenses occur. 

3. Prioritize Your Debt Repayment Strategy

The average American carries $103k in debt including mortgages, credit cards, and auto loans. Devise a strategic plan to tackle outstanding debts so you can allocate more finances toward savings and investment options. 

Pro Tip: Members 1st Credit Union recommends consolidating debt with a personal loan. We offer competitive rates, so you have more money in your pocket each month!

4. Review Your Retirement Accounts

As part of your financial reset, we recommend reviewing your retirement accounts and investment portfolio. Consider increasing contributions to your retirement account and diversifying your investments. Explore tax-deferred options like IRAs and deferred annuities. Additionally, you can rebalance your investments to adapt to market fluctuations.

Pro Tip: Talk with a specialist about Traditional and Roth IRAs to diversify your portfolio! 

5. Evaluate Your Insurance

The final step to a financial reset is to assess your insurance coverage. Talk with an insurance specialist to make sure you have adequate coverage between health insurance, home/auto insurance, and life insurance. If your insurance rates have consistently increased, you can shop other companies to find better rates. 

Talk to a Members 1st Specialist About a Financial Reset

If you’re looking for additional support with your financial reset, Members 1st of NJ is here to help. Visit our financial education page for resources or talk with a credit union specialist to guide you through smart money changes. 

We are committed to supporting you throughout this journey of financial wellness. When you take control of your finances and implement these strategies, you will see a positive impact on your financial well-being. Remember, it’s never too late to hit the reset button and pave the way for a brighter financial future! 

Not a member yet? Joining is easy! Visit our New Jersey member groups to see if you qualify.