It's hard to overstate the importance of a sound financial strategy — your current spending + saving habits determine the success of your long-term goals. Think: buying a home, paying down debt, or having a fab retirement.

Not sure where you stand? Here’s how you can check in on your financial health:

Step 1: Get organized

Not unlike cute coffee mugs, financial documents collect surprisingly quickly over time. Make sure you know where the following items live:

Financial account statements
Bills + receipts
Checks, pay stubs, and employee benefits
Insurance policies
Tax statements + returns
Mortgage and personal property records
Retirement plan and investment statements

Step 2: Understand your habits

Income and lifestyle changes over time — and so does your spending.

The key to staying on track is to regularly audit your income and expenses and adjust them based on your long-term financial goals. Track your spending for three to four months + divide them into one of five bins:

Essential: Rent, food, and other necessities
Lifestyle: Expenses that bring joy (aka, the fun stuff)
Fixed: Non-essential monthly expenses (think: subscriptions + memberships)
Variable: Sporadic or annual expenses (insurance premiums, new tires, etc.)
Savings: Money set aside for cash reserves, retirement, and other long-term goals

Remember, the most effective financial strategy is the one you can stick with. | Photo provided by Richardson Private Wealth Advisors

Step 3: Manage your expenses

Next, assess your habits to find an expense management strategy that works for you. Psst... this will help set you up to minimize your expenses + plan for a major purchase.

Here are a few common strategies:

50/30/20 method: A flexible way to allocate monthly funds
Envelope system: A no-nonsense method to rein in excess spending
Zero-based approach: Perfect for Type A personalities

The best method depends entirely on your habits — if you’re a chronic shopper, for example, the rigidity of the envelope system might help you curb those late-night sprees.

Step 4: Tap in a professional

Feeling overwhelmed? Want a second look? Consider working with a professional to streamline the process.

Pro tip: Check out these helpful (and free) resources breaking down market and economic insights + financial goals and priorities.

Make your money work for you