Healthy finances are essential for your overall wellbeing and independence. Most people think you need a high-paying salary or need a lucky win to improve your finances. However, when you approach your finances in an organised and smart way, that’s all it takes to improve your financial situation, invest, and save.
When you get stuck in a rut with money, sometimes it may be tempting to take out short-term loans. In some situations, this can be a good idea. However, there are several things you can do beforehand to improve your situation.
Break Things Down
Track your spending. This may feel like a tedious task, but it is incredibly important for finding ways to improve your money situation. Reviewing your total income and total outgoings allows you to create a breakdown of essential bills to be paid, along with an idea of where your money is going, especially if you’re spending a lot on non-essentials. It’s easy to get into habits of eating out, unlimited social events, and buying things for yourself. However, you’ll notice the effects on finances and there can be ways to cut don to save money.
Budget, budget, budget
Once a review is complete you can understand your spending habits more. You can prioritise the essentials while setting budgets for nonessentials. It’s important to create realistic budgets that work for you and your lifestyle. If eating out is a huge part of your spending, then it may be useful to consider cooking more meals from scratch at home.
Build Up Your Savings
Building savings allows you to set aside money each month, or even week, depending on how you schedule it. This allows you to dip into funds when unforeseen circumstances occur. It’ll also reinforce the habit of putting money away which is essential for achieving goals.
Pay Bills on Time
Obviously, this is important. Paying off bills at the beginning of the month helps you prioritise essential spending and avoid incurring late fees. Once the essentials are paid, you can have a better idea of what ‘play money’ you have for the rest of the month. Having a sound payment history can also lift your credit score and improve interest rates going forward.
Reassess Recurring Charges
It’s easy to subscribe to services that you rarely or never use. This is easily done when there are short-term benefits to reap, like a discount code, but then you forget about the recurring charges. Monthly subscriptions, streaming services, and mobile apps that charge your bank account are all things to look out for. It’s important to set time aside to review these to be aware of ones that you no longer need and can cancel.
Create an Investment Strategy
There are plenty of benefits to investing your money. The value of our money is relative to inflation; therefore, learning about ways to invest your money will retain its value over time. Otherwise, your cash only builds minimal interest sitting in a bank account. Take time to educate yourself on money and create a strategy you can maintain. Even small investments can create significant returns long-term.
There are plenty of ways to keep track of your spending, that allows you to review and save for the future. Financial stability is key to our wellbeing and a lot of it comes down to habit. Over time, building healthy money habits will build your money management skills that will see you through life.
