Advertising
Advertising

10 Tips for Improving Your Finances

10 Tips for Improving Your Finances

The vast majority of Americans are only one $500 emergency bill away from being financially destitute. In fact, a survey indicated that 62 percent of U.S. adults could end up homeless if they skipped even one paycheck. Out of this group, only 58 percent believe that they could make up for an unexpected $500 expense by reducing their other expenses, using a credit card or borrowing money from a family member or friend. In other words, there are far too many people who currently do not have any type of safety net.

To help prevent yourself from remaining or falling into this trap, it is imperative to take a close look at your finances and make a few lifestyle changes. Fortunately, this does not need to be nearly as drastic as most people fear. By implementing even a few of the following suggestions, you should be able to build your savings account and begin more effectively planning for retirement.

1. Do an Audit of Your Bills

When was the last time you sat down and thoroughly looked through all of your bills? If you are like most people, you pay the minimum due amount on each bill without paying much attention to errors or interest rates. Auditing your bills can help you make sure that billing mistakes are not unnecessarily increasing your expenses. Additionally, a bill audit will enable you to learn how much money you would save in the long run by adding $10 to each of your credit related payments.

2. Purge Unnecessary Expenses

We all make choices regarding how to spend our money, and most of us have developed at least one or two unfortunate blind spots. For example, you may really like the version of yourself that goes to the gym once a month and continuously pledges to go more often, but this does not mean that you are making a wise financial decision by paying that monthly fee. Unless you are regularly utilizing something, it is best to purge the unnecessary expense.

Advertising

It is also smart to look at unrealistic expenses such as a beer budget that outweighs what you pay for electricity. If you are struggling to build a savings account or pay your bills on time, you must make difficult choices that will include cutting back or eliminating things that serve no practical purpose.

3. Contact Creditors to Renegotiate Your Repayment Terms

Many people erroneously assume that their interest rates and repayment terms are set in stone. However, the truth is that you always have the ability to call and attempt a renegotiation. In some cases, this technique may not get you anywhere. Overall, though, creditors are usually willing to work with people who have kept their payments up and express a need for a temporary or permanent alteration to their repayment terms in order to continue paying everything off on time.

4. Carefully Explore Your Trading Options

There are numerous trading options that can help you save for retirement, but you need to carefully examine everything before you make any large investments. The stock market can be very volatile, but there are some stocks that tend to stay more stable or have a better chance of rebounding quickly. Studying trends and talking to an experienced stock broker will help you make a better choice.

Binary options are another robust possibility that many people are not very familiar with. In a nutshell, binary options allow you to not only get involved in trading stocks, currency pairs, commodities and indexes but to also make predictions about how well they will do within a specified time period. If your predictions are accurate, you can earn a nice return on your investment. You can also use loss protection to prevent yourself from losing a lot of money when your guesses are inaccurate. In other words, binary options can be a viable way to earn some extra money for your savings account.

Advertising

5. Utilize High-Yield Investments

High-yield investments do come with a bigger risk factor than turning to treasury bills that have an almost non-existent return rate, but this does not mean that you cannot use them to your advantage. The younger you are, the safer it is to gamble on truly high-yield investments because you will have more time to recover any losses.

Please note that it is not wise for people who have a minimal savings account to invest everything they have into these investments. But if you put 10 to 20 percent of your savings into an investment that has high-yield results and a relatively solid history, you could end up cashing out with a significantly higher amount of money that can then be rolled into a safer opportunity.

However, if you want to play it safe altogether, a money market account should help you earn at least 1 percent annually on your savings. Once you achieve a savings of $50,000, this would provide you with a free $500 bonus after one year.

6. Optimize Your 401k

Your 401k options are probably diversified and very confusing, especially if your employer has put a few plans in front of you that do not come with a detailed description. When you add the recent turbulence of the stock market into the picture, it can become quite terrifying to invest money in this way.

Advertising

Instead of running away from this investment opportunity, take the time to more carefully examine your choices. You may find that the plans that are being pushed toward people in your age range are not right for you. After all, a conservative plan will not accrue much money, but it will also minimize your risk of losing everything you have contributed to your 401k.

7. Make a Weekly Savings Plan

In just one year, you can put together a savings account that will enable you to avoid any $500 financial disasters. $10 a week is all it takes to build up a savings account with $520 in it. It may seem unrealistic for people who live paycheck to paycheck to set aside $10 weekly, but you should be able to find this money by prioritizing your expenses and purging anything that is not necessary.

8. Build a Precise Budget

According to a Gallup poll, 68 percent of Americans do not build or use a detailed budget to help them manage their expenses. This is a major mistake that could seriously hinder your ability to get your finances on track. Instead of allowing yourself to spend money without having any idea if you can afford it, you need to sit down and build a precise budget every month. This budget should include everything from your major expenses to minor purchases.

By doing this, you will be able to see how your money is really being used, and this will make it easier to cut out unwise expenditures. Looking at this budget regularly and updating your check register daily is the absolute best way to keep yourself from spending money you do not have.

Advertising

9. Take Advantage of Free or Inexpensive Hobbies

We all need hobbies or a way to blow off steam. For some of us, this comes in the form of televised entertainment. The average cable bill has reached an astounding $99, though, so this is not a good way to scale back your expenses. Instead, you should consider cord-cutting measures such as Netflix or Hulu. For a fraction of the cost, you will be able to enjoy countless movies and TV shows.

Walking and many other physical activities are another free or inexpensive way to fill up your spare time, and they come with the added bonus of being good for your health. If you prefer to stay in and do something quiet, Scribd provides readers with unlimited access to eBooks and comic books for less than $9 per month. Adult coloring is another popular trend that has an initial cost due to acquiring the necessary supplies but will ultimately provide many hours of cheap entertainment.

10. Prioritize Your Personal Goals

We all have personal goals aside from the desire to not fall into bankruptcy over one medical bill. Prioritizing these goals can help ensure that you spend your money as wisely as possible. A good example is that some people buy a daily latte from Starbucks but then bemoan the fact that they cannot afford a monthly wellness massage.

If reducing stress and improving your health is your top personal goal, then it makes sense to skip your daily latte so that you can save up for a massage instead. Keep in mind that you could always make coffee at home for a smaller fee. This will give you a personal daily indulgence without derailing your goals. No matter what your personal goals are, you can achieve them in this same way by being smarter with your daily expenditures.

Now that you have access to several actionable tips, it is time for you to put some of them to work! You may also want to download some handy expense apps to make it easier to monitor your spending. With a little practice and some dedication, you can reach your goals and build a savings account that will allow you to avoid financial disaster during an emergency.

Featured photo credit: Piictures of Money via flic.kr

More by this author

Holly Chavez

Writer, Entrepreneur, Small Business Owner

How I Keep the Spark Alive in My 10 Years of Marriage 8 Psychological Tricks To Help You Nail the Interview of Your Dream Job The Ultimate Solution To Your Super Long Stay At Bathroom: Constipation Remedy. Low glycemic index foods I Promise These 10 Low GI foods can Keep You Fuller For Longer! Emotional Quotient Isn’t Just About Emotions. It Involves Numerous Skills

Trending in Money

1 How Being Smart With Your Money Leads to Financial Success 2 17 Practical Money Skills that Will Set You Up for Early Retirement 3 25 Things to Sell to Make Extra Money Easily 4 How to Pay off Debt Fast Using the Stack Method (A Step-By-Step Guide) 5 30 Fun Things To Do With Your Friends Without Spending Much

Read Next

Advertising
Advertising

Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

Advertising

So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

Advertising

Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

Advertising

You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

Advertising

Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

Read Next