6 Simple Tips to Improve Your Finances

finances

When was the last time you combed through your bank accounts, pay stubs, and budget? If a shrug is your answer, it might be time to sit down with an extra-large cup of coffee and a calculator, and begin to crunch those numbers. You work hard for your money, so you want to ensure that every dollar and cent is accounted for.

Once you have the numbers in front of you, it is time to prioritize and determine what you want for your finances and where you see yourself in five, ten, or 25 years. Improving your finances is not a fantasy. It can be a reality if you take it seriously.

Improving the current state of your finances begins by modifying your budget, calculating your earnings, and ensuring that your money is working for you by investing. You owe it to yourself and your wallet to start creating a long-term plan for your pocketbook.

Where do you start? We have compiled a guide of six simple ways to improve your finances, starting today:

1. Automatic Savings Plan (ASP)

Is it time to start paying yourself first?

It seems like your entire paycheck is gone before you can set aside enough money to transfer into savings, purchase shares of Tesla Motors, and pay down some of your debt.

The trick is simple: pay yourself first.

Before you do anything else with your earnings, you set aside money to put toward your retirement, emergency fund, or savings goal.

One of the best strategies to employ is utilizing an automatic savings plan, or ASP. It is easy enough:

  • You enroll in the program at your financial institution.
  • You select the amount of money you wish to save (ten percent is a recommendation).
  • You pick the date and frequency.
  • The process is complete. Set it, forget it, and watch your savings grow!

2. Pay Off Your Debt

Debt is a heavy burden upon your shoulders that can adversely affect your well-being – both financially and mentally. You can lose sleep at night when you think about how much debt you owe, from credit cards to payday loans to lines of credit. It is devastating to think that the U.S. has more than $14 trillion in private debt, and much of it will never be paid off.

You’re different, though. You can and will be able to get rid of your debt, no matter how large or small.

When you think about the amount of interest you pay each month, the debt-servicing payments consume a massive chunk of your income. This money could be put to better use by saving or investing. Re-order your financial priorities and instead of saving up for that new flatscreen TV, instead, allocate as much as you can towards shrinking your debt pile each month.

3. Lower Your Monthly Bills

If you have a dozen bills every month, you are stretching yourself too thin. Cable, phone, internet, gym membership, Netflix, Amazon, Uber Eats Pass, and the list goes on – it is the little things that can add up and imbibe a considerable percentage of your earnings.

It is time to do the unthinkable: lower your monthly bills.

But is it even doable? Absolutely! This is achieved by scaling back some of your services, asking for a better price, or even eliminating these services altogether. In today’s world, there are so many more options at your disposal, allowing you to curtail your monthly bills.

In the era of “the subscription service” we get caught in paying monthly fees for services or products that we may not even use on a regular basis. Taking stock of these regular charges that are draining your account may help you realize that you’d hardly even notice if some of these services or products were no longer accessible (i.e. your cable TV package, that third streaming service, or your “coffee of the month” subscription). Cutting the cord is not only a liberating experience, but it can also save you hundreds or thousands of dollars a year. This is money that can be used to pay down your debt or deposited into a mutual fund!

4. Start Investing

Have you been sitting on the sidelines for way too long?

Last year’s coronavirus-induced market meltdown created a new generation of investors, allowing young money to take advantage of beaten-down stocks that had been trading at (at the time) near record highs. While financial markets have recovered and have ascended to all-time highs, novice traders still have some opportunities. You just need to know where to look.

It begins by opening an account, like a self-directed trading account or an all-in-one checking and investment account. There are also plenty of free mobile investment accounts to take advantage of if you wish to bypass the power players and avoid hefty fees.

From here, there are plenty of investment strategies to employ, a treasure trove of stocks to comb through, and a long list of financial products – from exchange-traded funds (ETFs) to bonds – to buy.

You could also kill two birds with one stone by opening an IRA or filling out forms to add to your 401(k).

5. Find Additional Income Sources

For too many Americans today, their incomes are not keeping up with the rising cost of living. Whether employers are tightening their belts, or the economy is not what it was before the COVID-19 public health crisis, weekly or bi-weekly paychecks are not the same as they were many years ago.

The best way to handle this increasingly common situation is to adapt. The solution? Find additional income sources. Today’s economy has also produced plenty of opportunities to earn a part-time income, from ride-sharing to delivery service partnerships. Or, if you wish to remain in the confines of your humble abode, there are many online jobs to consider where you can apply your skills. Sure, it may interrupt your Netflix-binging marathon, but when you start to see the growth in your account, you’ll be glad you invested your time wisely!  

6. De-Clutter by Selling Used Stuff

With spring on the horizon, households are already planning their spring-cleaning campaign, which also includes de-cluttering. But before tossing your unwanted stuff in black garbage bags and chucking them on the curb, consider whether your old unwanted items may have value to someone else.  

This does not need to be a one-off either. As the years go by, you will have a pile of stuff that you will no longer want, such as old smartphones, broken-down laptops, old décor items, and outdated clothing. Get in the habit of posting these items on buy & sell sites or social media groups prior to hauling them out of your house.

Who knows? This could also encourage you to spend your money a little bit more wisely. The more junk you find yourself consistently getting rid of, the more you may realize that you’re accumulating more than you need. It’s the small changes that will over time, have a big impact on your future finances! 

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.