9 baby steps that lead to big financial goals


Determined to do better with credit and finances this year? Consider a big-toe dip, rather than a full-body leap, into the project.

"It's not realistic to do everything at once," says Kevin Weeks, president of the Association of Independent Consumer Credit Counseling Agencies, a nonprofit based in Fairfax, Virginia. "It's the same as physical fitness," he says. "If you embark on this incredible fitness regime, chances are you won't complete it and you'll fall off."

Setting and keeping financial goals will help improve finances and your credit rating. Here are nine resolution-worthy goals and suggested first steps toward reaching them.

Set these 9 baby steps to reach big financial goals

1. The goal: Pay bills on time.
The baby step: Arrange autopay for one bill.

Timely bill payment accounts for 35 percent of your FICO score. Being on time also saves money -- no more late fees or interest to pay -- and lessens stress, Weeks says. He suggests enrolling in autopay -- an automatic deduction from your checking account -- for one bill, preferably a phone bill or utility bill that's roughly the same amount each month.

Once you feel comfortable with that, you may want to put other bills on autopay to streamline your process and make sure you don't miss any due dates.

2. The goal: Pay off credit cards.
The baby step: Pay $20 more than the monthly minimum on one bill.

That extra payment goes right to the principal and can help whittle down a giant bill. Weeks suggests tackling the card with the biggest balance and/or the highest interest rate first.

3. The goal: Plan a budget.
The baby step: Read your year-end credit card statements.

They'll show you how much interest you've paid, which is a great incentive to pare down your balances. They also break down spending into categories such as food, entertainment and travel.

Simply knowing how much you spend can jolt you into spending less, says Nicole Mayer, partner at financial consulting firm RPG Life Transition Specialists in Riverwoods, Illinois. For a second baby step, try leaving the credit cards at home for a week and spending only cash. "You're more conscious when you're dealing with cash," Mayer says.

4. The goal: Organize your financial life.
The baby step: Open your mail.

"Getting organized" is one of those perennial New Year's resolutions that rarely goes well. Still, it's an important step toward good financial health, says Patrice Washington, founder and CEO of Seek Wisdom Find Wealth, a personal finance consultancy in Atlanta.

To begin, open and read your daily mail. Neglecting that daily task leads to an overwhelming amount of paper, Washington says. Get used to that habit, then graduate by grabbing a handful of manila folders and filling them with crucial documents. (For tips on which documents to keep, see Hoard or shred? Organizing financial records.) The "Legal" folder would include Social Security cards, marriage licenses and health care powers of attorney. The "Credit Cards" file would include agreements from credit card companies. Ph.D-level organizers scan important documents and file them on a computer, backed up in a cloud app, Washington says.

5. The goal: Get smarter about finances.
The baby step: Read the fine print on one balance-transfer mailing.

If you hit your goal, if you finally pay something off, spend $30 or $60 on yourself. Get a manicure or pedicure -- just don't blow all of it. If you feel deprived, you'll never win. 

-- Michael Mazursky
President, North Star Benefits

"We read the big things that the marketing people want us to, but not the fine print," Washington says. Her clients often fall prey to balance-transfer pitches, she says. The zero percent rate might be good for three or six months, then it leaps to the high double digits. Balance transfer deals often come with fees, too.

Her recommendation: Grab your glasses and a cup of coffee, sit down and read all the fine print on one balance-transfer pitch -- then make the decision about whether to sign up.

6. The goal: Save more.
The baby step: Figure out how much you can reasonably save per month.

Rather than picking a random number such as $100 or $50 a month to sock away, Washington suggests being more methodical. Devise a budget, then use that to figure out what you can save regularly and sustainably, even if it's an odd amount such as $47 or $64.

7. The goal: Boost your credit score.
The baby step: Pull and read your credit reports.

The government source for free reports is; you can get your current FICO score for about $20 from Why bother? "If you don't know where you are, it's tough to tell where you're going," says Michael Mazursky, president at North Star Benefits, a financial consulting firm in Highland Park, Illinois. Roughly speaking, the average credit score is around 690. Anything under that needs work, he says.

Reading your credit reports is also important in detecting and stopping fraud. If you see an error or suspicious activity on your report, getting it corrected could boost your score.

8. The goal: Be your own financial advocate.
The baby step: Renegotiate a new rate for one bill.

Start with something you pay monthly, say a cable bill. Washington herself calls every 90 days to renegotiate something, even a gas bill, and saving $13 or $14 each time adds up.

Along similar lines, Mazursky suggests calling to renegotiate an interest rate or payment schedule on one credit card bill. This may be easier than you think and could save you thousands of dollars.

9. The goal: Stay on the path to financial health.
The baby step: Reward yourself.

Even dedicated dieters need a treat once in a while, and the same goes for stepping on a healthier financial track. "If you hit your goal, if you finally pay something off, spend $30 or $60 on yourself," Mazursky says. "Get a manicure or pedicure -- just don't blow all of it.

"If you feel deprived," he says, "you'll never win."

See related: 10 ways to make financial resolutions stick, 9 ways to revive your New Year's financial resolutions, 7 low-cost ways to get financially organized,

Published: December 31, 2014

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Updated: 10-28-2016

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