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5 Small Decisions That Will Improve Your Financial Status

5 Small Decisions That Will Improve Your Financial Status

Whether you have a little or a lot of money, there are many things that anyone can do to help improve their financial status.

Improving your finances is not about making life altering decisions. You do not need to become the world’s most well-informed investor or to create a budget that is so strict that you live on nothing but potatoes. Healthy money management is all about those small steps that you take towards greater overall financial health.

The end of the year is the time that many people think about changing their financial position for the better. If you’re not ready for a big resolution, you can make just as much progress by making several small decisions that are aimed at improving your finances.

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1. Get Informed

One of the most important things that you can do to improve your financial standing is to be informed about finance. You do not need to become an accountant or find a financial guru. It is all about educating yourself in the places that matter most.

The process of becoming better informed about your finances has two parts. First, you need to understand your own finances. Having a clear picture about where you currently stand is essential for setting and achieving your financial goals. You need to know what you have, what you earn and what you owe. This basic knowledge will have a real impact on how you look at finance.

Second, you need to know more about the basics of finance. You need to have an understanding of the impact of good debt and bad debt. You also need to know about how interest rates can work with you and against you. Learning about the different options that you have for saving money is another good place to start.

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2. Set Real, Achievable Goals

If you’re not already setting goals, there is no time like right now to begin doing so. If you are setting goals, there is no time like right now to measure your progress so that you can improve. Financial goals are important when it comes to improving your finances. These goals give you something to work for. They also give you something to measure your success by.

Setting goals is all about setting achievable goals. To do this, you need to be specific in the goals that you set for yourself.

Let’s say that your goal is to save money or pay off personal loans. You need to know how much money you want to save. You also need to know how you want to save it. Do you want to set up a savings plan to save $500 a month? Or do you want to cut spending to save an extra $200 for extra expenses?

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These are two different types of saving and you would use different methods of achieving each goal. This is why it is so important to make your goals as detailed as possible Do not forget to keep your goals attainable. An unreachable goal sets you up for failure and often hurts not only your finances but your attitude about money.

3. Take Your Time

Taking your time is one of the most important decisions you can make about your finances. Rome was not built in a day and your retirement accounts will not be either. Choosing to think about your financial decisions is also a multi-faceted approach. First, you should make sure that you take time to think about your purchases before you buy them. This helps weed out impulse buys and helps you spend money in a health way. One great way to do this is to put the item in your shopping cart online and if you are still thinking about it the next day, you may actually need the item.

Secondly, you should take your time creating a financial plan. When striving to reach a goal, give yourself enough time to reach it. Trying to save too much, too fast is hard to do. Have patience with yourself and your bank account.

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4. Eliminate Things You Don’t Use

Everyone has at least one bill that they pay every month for a service that they do not use. Whether yours is a landline, a gym membership or a subscription service that you have not figured out how to cancel, take some time to declutter your finances. Eliminating even one thing from your monthly selection of bills can make a big difference on your monthly finances. More importantly, it teaches you how to let go of spending habits that are not serving you.

5. Set Up an Automatic Savings Plan

Saving is important yet it is not at the forefront of everyone’s mind. You can make a decision to automate your saving plan to help make sure that it happens. Even if you only transfer $20 a month into a savings account, every little bit helps you build up a little nest egg. It also makes you more comfortable with saving. It’s a win-win decision.

Taking these small steps towards prosperity can take your further than you’d ever imagine. Remember that you have your whole life to manage your finances, you do not need to accomplish everything today.

Featured photo credit: GotCredit via flickr.com

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Published on November 20, 2018

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The Best Ways to Save Money Even Impulsive Spenders Can Get Behind

The truth is, there are many “money saving guides” online, but most don’t cover the root issue for not saving.

Once I’d discovered a few key factors that allowed me to save 10k in one year, I realized why most articles couldn’t help me. The problem is that even with the right strategies you can still fail to save money. You need to have the right systems in place and the right mindset.

In this guide, I’ll cover the best ways to save money — practical yet powerful steps you can take to start saving more. It won’t be easy but with hard work, I’m confident you’ll be able to save more money–even if you’re an impulsive spender.

Why Your Past Prevents You from Saving Money

Are you constantly thinking about your financial mistakes?

If so, these thoughts are holding you back from saving.

I get it, you wish you could go back in time to avoid your financial downfalls. But dwelling over your past will only rob you from your future. Instead, reflect on your mistakes and ask yourself what lessons you can learn from them.

It wasn’t easy for me to accept that I had accumulated thousands of dollars in credit card debt. Once I did, I started heading in the right direction. Embrace your past failures and use them as an opportunity to set new financial goals.

For example, after accepting that you’re thousands of dollars in debt create a plan to be debt free in a year or two. This way when you’ll be at peace even when you get negative thoughts about your finances. Now you can focus more time on saving and less on your past financial mistakes.

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How to Effortlessly Track Your Spending

Stop manually tracking your spending.

Leverage powerful analytic tools such as Personal Capital and these money management apps to do the work for you. This tool has worked for me and has kept me motivated to why I’m saving in the first place. Once you login to your Personal Capital dashboard, you’re able to view your net worth.

When I’d first signed up with Personal Capital, I had a negative net worth, but this motivated me to save more. With this tool, you can also view your spending patterns, expenses, and how much money you’re saving.

Use your net worth as your north star to saving more. Whenever you experience financial setbacks, view how far you’ve come along. Saving money is only half the battle, being consistent is the other half.

The Truth on Why You Keep Failing

Saving money isn’t sexy. If it was, wouldn’t everyone be doing it?

Some people are natural savers, but most are impulsive spenders. Instead of denying that you’re an impulsive spender, embrace it.

Don’t try to save 60 to 70% of your income if this means you’ll live a miserable life. Saving money isn’t a race but a marathon. You’re saving for retirement and for large purchases.

If you’re currently having a hard time saving, start spending more money on nice things. This may sound counterintuitive but hear me out. Wouldn’t it be better to save $200 each month for 12 months instead of $500 for 3 months?

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Most people run into trouble because they create budgets that set them up for failure. This system won’t work for those who are frugal, but chances are they don’t need help saving. This system is for those who can’t save money and need to be rewarded for their hard work.

Only because you’re buying nice things doesn’t mean that you’ll save less. Here are some rules you should have in place:

  1. Save more than 50% of your available money (after expenses)
  2. Only buy nice things after saving
  3. Automate your savings with automatic bank transfers

These are the same rules that helped me save thousands each year while buying the latest iPhone. Focus only on items that are important to you. Remember, you can afford anything but not everything.

How to Foolproof Yourself out of Debt

Personal finance is a game. On one end, you’re earning money; and on the to other, you’re saving. But what ends up counting in the end isn’t how much you earn but how much you save. Research shows that about 60% of Americans spend more than they save.[1]

So how can you separate yourself from the 60%?

By not accumulating more debt. This way you’ll have more money to save and avoid having more financial obligations. A great way to stop accumulating debt is using cash to pay for all your transactions.

This will be challenging, depending on how reliant you are with your credit card, but it’s worth the effort. Not only will you stop accruing debt, but you’ll also be more conscious with what you buy.

For example, you’ll think twice about purchasing a new $200 headphone despite having the cash to buy them. According to a poll conducted by The CreditCards.com, 5 out of 6 Americans are impulsive spenders.[2]

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Telling yourself that you’ll have the discipline to not buy things won’t cut it. This is equal to having junk food in your fridge while trying to eat healthy–it’s only a matter of time before you slip. By using cash to make your purchases, you’ll spend less and save more.

A Proven Formula to Skyrocket Your Savings

Having proven systems in place to help you save more is important, but they’re not the best way to save money.

You can search for dozens of ways to save money, but there’ll always be a limit. Instead of spending the majority of your effort saving, look for ways to increase your income. The truth is that once you have the right systems in place, saving is easy.

What’s challenging is earning more money. There are many routes you can take to achieve this. For example, you can work long and hard at your current job to earn a raise. But there’s one problem–you’re depending on someone else to give you a raise.

Your company will have to have the budget, and you’ll have to know how to toot your own horn to get this raise. This isn’t to say that earning a raise is impossible, but things are better when you’re in control right? That’s why building a side-hustle is the best way to increase your income.

Think of your side-hustle as a part-time job doing something you enjoy. You can sell items on eBay for a profit, or design websites for small businesses. Building a side-hustle will be on the hardest things you’ll do, be too stubborn to quit.

During the early stages, you won’t be making money and that’s okay. Since you already have a source of income, you won’t be dependent on your side-hustle to pay for your expenses. Depending on how much time you invest in your side-hustle, it can one day replace your current income.

Whatever route you take, focus more on earning and save as much as possible. You have more control than you give yourself credit for.

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Transform Yourself into a Saving Money Machine

Saving money isn’t complicated but it’s one of the hardest things you’ll do.

By learning from your mistakes and rewarding yourself after saving you’ll save more. What would you do with an extra $200 or $500 each month? To some, this is life-changing money that can improve the quality of their lives.

The truth is saving money is an art. Save too much and you’ll quit, but save too little and you’ll pay for the consequences in the future. Saving money takes effort and having the right systems in place.

Imagine if you’d started saving an extra $100 this next month? Or, saved $20K in one year? Although it’s hard to imagine, this can be your reality if you follow the principles covered in this guide.

Take a moment to brainstorm which goals you’d be able to reach if you had extra money each month. Use these goals as motivation to help you stay on track on your journey to saving more. If I was able to save thousands of dollars with little guidance, imagine what you’ll be able to do.

What are you waiting for? Go and start saving money, the sky is your limit.

Featured photo credit: rawpixel via unsplash.com

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