3 Simple Actions to Improve Your Personal Finances

No matter your current stage in life, there are easy ways to improve your personal finances. Laura covers three simple actions to take today to create more financial security, increase your options, have more peace of mind, and get closer to accomplishing your financial goals. 

Laura Adams, MBA,
September 7, 2016
Episode #464

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3 Simple Actions to Improve Your Personal FinancesWe’re all at different stages in our financial lives. Maybe you’re a new graduate just starting your career. Perhaps you’re just getting back on your feet financially after experiencing a hardship. Or you may have decades of experience but finally be ready to go all-in with some new financial goals.

Even if you're in good shape financially, anything you can do to improve is a boon. Having more financial security increases your options, gives you more peace of mind, and helps you get closer to accomplishing your goals. In this post, I’ll give you 3 simple actions to take right now to improve your personal finances.

Action #1: Get in touch with your future self

One of the reasons the majority of Americans are woefully unprepared for retirement is because we have trouble visualizing the future.

We forget how quickly time passes. We underestimate how much small decisions and everyday actions impact our finances decades from now. We don’t identify with the older person we will become one day.

To get in the right frame of mind to feel more in touch with your future self, use an app to age your face, like AgingBooth or Face Retirement. It's a little scary to see, but it really does help you imagine being decades older.

An interesting behavioral study put test subjects in an aging simulation where they could interact with their virtual future selves and then answer questions about money. Not surprisingly, the participants who felt more in touch with their future selves were willing to save more for retirement.

When you can't link your present and future selves as being the same person, you make decisions about the future as if your future self were actually another person. Likewise, when you feel connected with an older version of you, saving is easier because you’re setting aside money to help yourself—not giving it to a stranger or someone you don't believe will truly exist one day. 

When you can't link your present and future selves as being the same person, you make decisions about the future as if your future self were actually another person. 

So connect with your future self by imagining that you're retired and can no longer work. What would an older, wiser version of you say? Would he or she be happy and financially comfortable because you invested for retirement on a regular basis? Or would he or she be struggling to make ends meet and feel angry at you?

If you realize that you need to make important changes in your life and finances, the good news is that you still have plenty of time to change your future!

If you're not sure how much you need to save to achieve your retirement goals, check out the AARP Retirement Calculator. It's one of my favorite tools to make sure your finances are on track. You answer a series of simple questions and see how you'll fare in the future. Then you can adjust the results by changing variables like retirement age and the amount of income you want. 

See also: A Checklist to Measure Your Personal Finance Success

Action #2: Create a don’t-do list

Most people keep some kind of running to-do list that they want to complete. Well, a don’t-do list can be just as powerful. It’s a list of everything you should stop doing because it takes up too much time, energy, or money.

For instance, you could focus on some specific anti-actions, like:

  • Don’t buy anything that costs $100 before a 48-hour waiting period
  • Don't buy a new car before you really need it
  • Don't spend so much time playing video games

Some of my favorite don’t-dos are more philosophical ideas like:

  • Don’t compare your financial situation to others 
  • Don’t take your ability to earn an income for granted 
  • Don’t be too busy to connect with your family and friends

Come up with a few ideas or concepts that you need to stop doing in order to make progress and improve your financial life. You might add them to the top of your to-do list and highlight or circle them so they stand out.

See also: A Blueprint to Prioritize Your Personal Finances


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