Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.
This week’s episode starts with a discussion of what to do if you recently lost your health insurance. Visit HealthCare.gov to see what your options are under the Affordable Care Act, since that’s likely to be the most cost-effective solution. Resist the temptation to go without coverage, since you would be one accident or illness away from potentially catastrophic medical bills. Consider taking advantage of pandemic-related hardship and forbearance programs if that frees up money to pay for health insurance.
Then we pivot to this week’s question from Ryan. He says, "Five years ago, when I was far less financially literate than I am now, I made some poor choices that really tanked my credit scores. And I spent the last several years working to improve my credit and finances. I think I've done a pretty good job and I feel lucky to be in this position. Now I want to take full advantage of it. What steps should I consider to continue my forward momentum?"
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Before you can plan your financial future, you need to figure out what’s most important to you. Setting and achieving financial goals often involves tradeoffs, so knowing what you value most can help you decide among your options.
Visualize what you want your life to be like in five or 10 years. What are you doing? What experiences have you had? What does your future look like? (You can also choose from a list of common financial goals, if that’s easier.)
Once you’ve set your goals, you can use calculators and other tools to help you figure out how to achieve them. The first step for most people is to create a budget. Knowing where your money is going can help you figure out how to change your spending to free up more cash to support your goals. Various calculators — for saving, debt payoff, college, retirement and so on — can help you decide exactly how much you need to put aside and for how long to make your dreams real.
Life will throw you curveballs, of course, and your goals may change. Review your plan regularly to gauge your progress and make adjustments.
Consider your values. Most people need to save for retirement and emergencies, but beyond that your goals are shaped by what’s most important to you.
Use calculators to help you plan. Budgeting, savings and debt payoff calculators can help you get where you want to go.
Reevaluate as you go. You’ll need to adjust your plan and even your goals as circumstances change.
More about setting financial goals on NerdWallet: