Managing your personal finances is a crucial step to improving the quality of your life. The adage “Money can’t buy happiness” is a subject of debate in the modern world. While avarice isn’t helpful, money can buy you many things, which in turn make you and your loved ones happy.
Fortunately, you don’t need a cushy job, an inheritance, or a lottery win to improve your finances. All it takes is better management of your money. Keep a close watch on your spending, improve your investments, and save as much as possible. When you do all these consistently, you’ll be a few steps closer to achieving your financial goals.
If your finances are stuck in a bad place with no solution in sight, there is hope. There are several things you can do to create a better financial situation for yourself. Here are the steps you must take to get started.
Boost Your Savings Using a Debit Card
Using a debit card is one way to start adding to your savings and building credit. Many debit card apps allow you to set up automatic transfers from checking to savings.
In addition, some debit cards even offer a “round-up” saving feature. Every time you swipe the card, the payment is rounded up to the nearest dollar. That amount is then transferred from the checking account to the savings account. It is a simple way to make your money grow and strengthen your personal finances.
Monitor Your Spending
Are you aware of what you are spending every month? If you are not monitoring your spending, get started now. Taking steps to improve your spending habits will help boost your savings.
Experts suggest using an app to help you manage your money and track spending. This allows you to monitor how much you’re spending on the non-essentials, such as your Starbucks habit and the new trendy item. That daily Starbucks run can suck up over a hundred dollars you could be saving each month.
There is a close connection between spending awareness and savings. Knowing where every dollar is spent will help you maintain control of your finances at all times. Educate yourself on savings habits and work on improving your choices.
Build a Practical Monthly Budget
Planning is the key to improving your personal finances. Take into account your monthly income and spending habits to set a budget. Arrive at a figure you can maintain for the long term.
It is pointless to set a budget that involves making drastic changes to your lifestyle. You won’t be able to maintain it for long. Choosing to eat out occasionally is a more reasonable change than to stop going out for family dinners completely. The same goes for ordering takeout. If you are ordering four times a week now, cut it down to once or twice a week.
Create a budget that is in sync with your existing lifestyle and spending habits. Then try to find ways to save money within your means. This may involve cooking more frequently at home or spending less on new clothes and accessories. Doing this can help give you a realistic shot at meeting your budget. And sticking to your budget is the only way this method will work.
Start a Sound Investment Strategy
You may think investing is unachievable for you, given your limited income. However, it’s possible to contribute some money at the end of every month, even if your monthly earnings are meager. Regular contributions to your investment accounts can often build substantial gains by the end of the year.
There are a few ways to build an investment account. Start by checking to see if your employer offers 401(k) matching. This will build your savings substantially, and at no additional cost to you.
Save to Make Big Purchases in the Future
Impulse buying, especially of things you don’t need urgently, can undo all your saving efforts. A better way of acquiring what you want is to save up the money to fund those big purchases. This will make the process more affordable and also allow you to stay on course with your finance-building efforts.
Undoubtedly, there will be some major purchases you will be unable to simply save up for. It’s a rare individual who can buy a house with cash — especially in today’s hot housing market. Even a new car will often require a loan. What you can save up for, however, is a significant down payment on either of those purchases.
Obviously, when you can put substantial money down, you won’t need as large a home or auto loan to make up the difference. Less principal translates to less interest accrued; plus, a larger down payment will typically yield a lower interest rate. Both factors mean you’ll pay a good deal less money over the life of your mortgage or car loan.
The path to better finances begins with changing your financial habits. It is a huge challenge, but you must remain laser-focused on the task to make progress. Incorporating some of these changes will be easier than others. But these tips can ease your journey towards achieving your personal finance goals.
Remember, this is not something you do once and forget. These tips will help guide you throughout your life. If you stay committed, you can improve your money management skills and steer your personal finances in the right direction.