Today’s post comes from guest writer Aiden White.
Aiden is a San Francisco based writer. Discussion and debates on financial and political subjects are her forte. Being a debt fighter in her personal life, her goal is to share innovative thoughts and knowledge in the debt communities. Get in touch with her at aidenwhitejoe@gmail.com.

What’s in your financial junk drawer? Is it incomplete goals from 2018? Or could it be that you are not coming clean with your partner on some financial issue? Like the junk drawer in your kitchen, you may be reluctant to look at what is lurking in there. But to be successful in reaching your goals you have to sort through it.

Incomplete Financial Goals

It’s easy to say you want to do something, but it’s harder to commit to it. Saving more money or reducing debt are common New Year’s resolutions, but if you weren’t successful in achieving your goals in 2018, it could be that you didn’t put enough specificity around them. Here are a few common goals and how to define them in a way that will motivate you.

Build an emergency fund

An emergency fund is savings that will help you in the event of a personal financial crisis such as the loss of a job, a prolonged illness or an unexpected major expense. Your emergency fund should be enough to cover at least three months of basic living expenses. Yours may need to be bigger depending on your circumstances.

This is your top priority. To help you achieve it, define how much you need to save and determine exactly what you will do to save it. For example, you might decide to get a jump on your savings by dedicating your next bonus or tax refund to it. You might decide to cut out restaurant trips until your emergency fund is in place.

Set milestones. Determine what you will save each month, have saved in six months, etc., and when you will complete your emergency fund. Whatever your strategy, you will be more likely to achieve your goal if you have one.

Get out of debt

Debt creates financial insecurity. With debt, your emergency fund needs to be larger than it otherwise would need to be, and you are more prone to a financial disaster.

Consider consolidating high-interest credit card debt or multiple credit cards to a 0% APR balance transfer card. You may also be able to consolidate other unsecured debt like payday loans, utility bills, medical bills, personal loans, etc.

Once your debt is consolidated and you are down to your lowest interest rate possible, you can pay down your debt using a strategy such as the debt snowball. In this strategy you make only the minimum payment required on all your loans except the smallest one. Pay as much as you can on that one. Once that is paid off, take the full monthly payment you were making on the smallest loan and combine it with the minimum payment on the next smallest loan. Continue through the remaining obligations.

As with your emergency fund, you’ll need a strategy for raising the money to make extra payments on your debt. Determine what you will do differently as part of setting your goal.

Create and follow a budget plan

A recent survey revealed that only 32 percent of people make a proper financial budget. Your budget is your strategy for achieving your goals.

If you need guidelines to get started, experts suggest a 50/20/30 rule. 50 percent of your money should be used for essential spending (rent, transportation, utilities), 20 percent should go towards completing personal financial goals (saving and paying off debt), and the remaining 30 percent could be used for discretionary expenses.

Save for your retirement

Supporting yourself in retirement takes a lot of money. To make it as painless as possible, you need to start saving for it as soon as you can. A recent survey from Provision Living revealed that 43% of millennials have $5,000 or less in savings for retirement.

Start by taking advantage of your employer sponsored retirement plan, especially if they offer to match your contributions. The automatic contributions will make saving easier for you. If your employer doesn’t offer a retirement savings plan, open a Roth IRA. You can make those contributions automatically as well by having your employer make a direct deposit from your pay to your IRA account.

Hidden financial secrets

According to creditcards.com, one in twenty people in a serious relationship have a secret bank or credit card account. Whether you’re embarrassed by a purchase you made or you’re keeping a slush fund so you can spend money without discussing it with your partner, this could be considered financial infidelity.

The problem is that many of us still hesitate to talk about money with anyone, even with the person whom we love the most. Keeping financial secrets can ruin your relationship as well as create grave financial problems. This corner of your junk drawer may be hard to face, but you must for the health of your relationship and your finances.

That financial junk drawer is causing you stress. Unfinished business and unrevealed secrets will stay on your mind until you resolve them. Perhaps this year’s resolution should be to get rid of the junk drawer all together.

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