5 Top Money Moves to Make Now

Quick Answer

The money moves everyone should make now include bolstering your savings, paying off debt, investing for retirement and improving your credit.

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Few things can be said with any certainty about the future. That only reinforces the need to make sensible decisions regarding your money now. When laying the groundwork for matters concerning your financial future, these five essential money moves can put you on the path to success—this year and beyond.

1. Start Budgeting

When building short- and long-term financial health, the first step is creating (and sticking to) a budget. Doing so can make it easier for you to pay your bills on time, save for retirement, establish an emergency fund and reach other financial goals.

Take these basic steps to create a budget that works for you.

  • Start with your monthly net income. If your wages remain the same week to week or month to month, determining your monthly net income is easy: Simply add up your take-home pay for one month. If your income fluctuates, average your monthly take-home pay over three to six months to get a solid estimate.
  • Track your spending. Now that you know about how much money is coming in, the next step is to figure out how much is going out each month. Determine first which fixed expenses are essential, such as rent, utilities, groceries, car payment and the like, and which fall under discretionary spending, such as meals out and entertainment.
  • Set financial goals. Although your short- and long-term goals may change over time, having a plan can keep you motivated to move ahead with a budget. Short-term goals may only be for the next two to three years and might include paying down a credit card balance or building a sinking fund for a large purchase like new furniture. Long-term goals might take years to achieve and may include paying off school loans or your mortgage.
  • Set spending limits. Determining your income vs. spending lets you make adjustments to your discretionary expenses so you aren't overspending and instead have money left over to put toward your goals. Review your spending weekly or however often you need to to stay on track. You may have to make adjustments over time if prices or your bills increase or decrease.
  • Review your budget. After everything is in place, don't forget to go back and modify the numbers when necessary. As you pay down or pay off debt, get married or move across the country, expenses and income can change. In the future, you may need to reevaluate your budget and set new financial goals.

2. Build Your Savings

Building your savings helps you reach your financial goals and gives you a buffer to fall back on if something unexpected happens and you need cash fast.

An important part of building your savings is having an emergency fund to help guard against financial fallout from unexpected expenses such as unplanned medical bills, job loss or an expensive car repair. Opening a separate account to house your emergency savings can help you avoid the temptation to spend the money. A good rule of thumb is to tuck away three to six months of expenses, but any amount is better than nothing.

Other savings goals might include money for a vacation or a wedding. Designating a sinking fund for these and other goals is similar to creating an emergency fund: You only go into the savings for the specific reasons it was created.

How much you save every month can depend on your own personal situation. You could follow the 50/30/20 rule, where you allocate 50% of your income for necessities, 30% for wants and 20% for savings (and adjust as necessary). One way to ensure the funds are there when you need them is to set up automatic payments into your savings accounts or to transfer a specific amount each month out of your paycheck.

3. Tackle High-Interest Debt

High-interest debt can weigh you down and make it tough to meet your money goals. As many credit cards charge high interest rates—some as high as 20% or more—paying down or paying off high-interest credit card balances can be key to tackling debt. There are a few ways you can do this.

  • Debt snowball method: With this method, you pay off the smallest credit card balance first, then the second smallest amount, until you eliminate debts one by one.
  • Debt avalanche method: With the avalanche method, you pay off the card balance with the highest interest rate first, then the card with the second highest rate, and so on. This method can save you money in interest over time but can also take longer to see tangible results.
  • Debt consolidation loan: If you can qualify for a consolidation loan with an interest rate lower than you're paying on your credit card balances, you could pay down debt faster and on a schedule that could make it easier to manage payments.
  • Balance transfer credit card: With a balance transfer card, you move outstanding debt from one or more credit cards to a new card that offers a low or 0% introductory APR on transfers. This can be a good option if you can pay off the balance before the promotional rate ends and the standard rate kicks in.

4. Invest for Retirement

Saving now for retirement can give you more control over your finances in the future. When you consider that the average social security payment for retired workers was just $1,623.10 in April 2022, having your own nest egg can be critical to your financial security.

An employer-based 401(k) is one way to invest in your future. A 401(k) can provide a good incentive to save by reducing your taxable income (deposits are taken pretax from your gross earnings), possibly providing an employer match and automatically transferring your contributions to the plan.

The average social security payment in April 2022, for retired workers was $1,666.49.

If your employer doesn't offer a 401(k) or you'd like an additional option, consider opening a traditional IRA or Roth IRA. You can contribute pretax dollars to a traditional IRA or after-tax dollars to a Roth IRA. With a 401(k) and traditional IRA, you'll pay taxes on the money once you begin withdrawing it in retirement; with a Roth, you'll withdraw the money tax-free when you retire. With any of these plan options, you'll have a number of investment options from which to choose.

You could also invest in stocks and bonds using a brokerage account. Stocks may provide higher long-term returns compared with bonds, but they come with higher risk; bonds are generally more stable.

5. Improve Your Credit

One of the best money moves you can make now is improving your credit. Because credit scores are based on the accumulated information in your credit report, a higher score is a sign of healthy credit. A good credit score can help you qualify for lower interest rates on loans and credit cards or help you get approved for higher credit limits. Other potential benefits include:

  • Better rates on car and other types of insurance
  • Higher likelihood of mortgage or rental approval
  • Ability to qualify for premium credit cards
  • Better terms on a new cellphone plan
  • Possibility to skip utility deposits

When taking steps to improve your credit, check out Experian Boost®ø—which gives you credit for making on-time utility, telecom and certain streaming service payments. It's especially good for anyone with little or no credit history, as well as borrowers who want to increase their credit score.

All the Right Moves

Making wise financial moves will not only help your money go further now, but also well into the future. You can get started now by checking your credit score for free with Experian.

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