Feelings of financial security are on the rise in the U.S., with 33% of Americans saying they don’t feel financially comfortable in 2024.
That’s a 6% jump from the previous year. But it’s possible to reverse those feelings to be in a better position and feel confident about your finances.
Here are several ways to move forward and begin your personal journey to financial empowerment.
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In This Article
#1: Set a goal
Empowerment can mean different things to different people. Depending on your financial situation, your priorities will be different from someone else’s. That’s why it’s important to choose your own definition of financial empowerment. And this can be done in stages.
First, think about what would make you feel financially secure at different stages of your life. From there, you can define short-term, mid-term and long-term goals that reflect your vision of financial empowerment.
#2: Make a budget
Whatever your goals may be, the next step is to create a budget. This is an empowering process because it gives you control over how you spend and save each dollar. The initial process is simple:
- Tally up how much cash hits your bank account each month
- Calculate your fixed expenses
- Adjust your variable expenses based on the money left over
- Figure out how much you have left to put towards your goals
Revisit your budget each month to see what changes you want to make. Nothing is set in stone, and you may have different levels of income or expenses at various times.
#3: Build an emergency fund
No matter your overall goals, it’s important to have a solid emergency fund in place. That way, you’re prepared for surprise expenses, like a car repair or hospital visit.
There are many different opinions on how much you should have in this fund, from as little as $500, all the way up to several months’ worth of expenses.
Reflect on the past several years of expenses you’ve had to choose a goal that feels right for you.
#4: Monitor your credit score
Monitoring your credit score is empowering in a couple of different ways. For starters, it helps you prepare to get the best financing rates when you want to borrow money.
If your score is lower than expected, you can see what has caused a drop and what steps you can take to fix it. Improving your credit takes time, so it’s smart to make this an ongoing practice.
The second reason you should monitor your credit score is to check for any identity theft or fraud. You’ll quickly notice if there is any suspicious activity so you can address issues (like a fraudulent credit card opened in your name) before they become too serious.
#5: Target high-interest debt
Paying off high-interest debt can be extremely empowering. 73% of Americans cite debt as a significant source of stress, so reducing or eliminating large balances can help your day-to-day anxiety levels.
Strategically managing your debt can go beyond making minimum payments. Consider options like:
- A debt consolidation loan or a 0% APR credit card to simplify repayment and potentially save on interest
- Paying off the highest interest balances first (known as the debt avalanche method) can reduce total interest costs
- Tackling smaller balances first (the debt snowball method) to build momentum and stay motivated
Read more: Debt Snowball or Debt Avalanche: Which Method Is Right for You?
#6: Learn more about money management
Whether understanding financial terms or learning how to optimize your retirement savings for taxes, you’ll feel empowered as you learn about managing your money.
Plus, it’s easier than ever with countless blogs, podcasts, YouTube videos, and other media related to personal finance.
Just remember to check the credentials of anyone giving advice or recommending a specific product.
#7: Save for retirement
What’s more empowering than feeling confident on your first day of retirement? By starting to save now, you’ll turn that vision into reality no matter how far or close you are to retiring.
In addition to contributing to your retirement savings, get smart about maximizing your balances and minimizing taxes. Take advantage of any employer contributions and research tax-advantaged accounts for which you may qualify.
#8: Work on your money mindset
No matter how much you save for your various goals, you won’t feel empowered if you don’t develop a positive attitude toward money.
Allow yourself to celebrate small milestones as you work towards different financial goals. It doesn’t have to be expensive or over-the-top, but it helps you appreciate your progress.
#9: Reassess your plan each year
Set a calendar reminder to review your financial plan at least once a year. Evaluate what worked and what didn’t while also making adjustments based on any recent or upcoming life changes.
For instance, having a child, upgrading your house, getting married or divorced—all of these personal events also impact your financial goals.
By regularly preparing and adjusting your finances, you’ll feel proactive instead of reactive. And that can help you achieve financial empowerment.
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Choose your own path to empowerment
As you make financial decisions to feel more empowered, find a balance between learning from professionals and making your own priorities in life.
Creating and executing a sound financial plan will boost your confidence and help you feel more secure as you move forward in your journey.
Written by Lauren Ward | Edited by Rose Wheeler
Lauren Ward is a personal finance writer who is passionate about helping people simplify their financial decisions. Her work has been featured in outlets such as USA Today Blueprint, CNN Underscored, and many more. She lives in Virginia with her husband and three children.
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