Seven Steps You Might Take for Financial Success

Soaring inflation has squeezed finances for many, pushing spending way up for everything from food and household needs to travel. So how can we overcome our financial woes? Personal finance expert Farnoosh Torabi offered seven tips for financial success in a discussion with Morningstar.1. Prioritize your savingsThat means savings isn’t just “the thing you do at the end of the month if there’s anything left over,” Torabi said. Automatically saving whatever you can, say 5% to 10% of each paycheck, will help. There are apps you can use for this. A smart app will “hook up to your checking account and see how your cash flow is working,” she said. The app may even text suggestions of one-time contributions to your savings when your cash flow looks good.2. As inflation soars, ask for financial help “Being your own financial advocate is really important, whether speaking up at work or with your billers,” Torabi said. At work, that may mean asking for a raise or looking for a higher-paying job, she said. “One of the bright spots in the economy now is the [strong] employment market.” 3. Make your billing dates work with your personal financial lifestyle You can ask your creditors to adjust the date of monthly payments to match your cash flow. “If all of your bills are coming due on the 15th of the month, that’s hard no matter who you are,” Torabi said. “You can sometimes just go on the website and change the due date for the bill.”4. Don’t discount the power of discount shopping That’s something you can always do. “Now there are so many sales, because retailers are struggling, and department stores especially have a lot of excess [inventory],” Torabi said. “So it does pay to research and shop around.” You can use apps to find the best bargains. 5. Spend mindfully “It seems such a simple exercise,” Torabi said. “Of course I want to only spend on the things that I care about, and we think we’re doing just that.” But young people entering their first job often “quickly start to accumulate bills and then they realize like six months in, I have nothing to show for it,” Torabi said.6. Ask yourself about your financial goals, make it meaningful, and don’t forget about retirement“Long-term, maybe I want to make sure I have enough for myself in retirement,” she said. “So, that means you contribute to the 401(k).” In the medium term, “maybe you want to buy a house,” Torabi said. “But that’s not for another 10 years. So, maybe you could put a little bit of money in an investment portfolio.”7. Afford yourself options in the future“Who doesn’t want options, and who doesn’t want to have money to afford those options?” Torabi said. “It could mean that you’re working for an employer, but you have so much money of your own that you could quit if you wanted to, or you could take two years off. You have suddenly this financial license to do what you want.”

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