Finances and money can seem so overwhelming and the last thing you want to worry about.
Here are 10 simple ways to educate yourself and improve your finances, and you can start today!
Budgets really can help improve your finances almost immediately by keeping you accountable and aware of where your money is coming from, and where it is going.
A budget allows you to track your incoming funds (income) against your outgoing funds (expenses). With this knowledge, you are in a better position to assess your spending and saving habits and make changes where necessary.
Implementing a budget to track these money movements lightens the monthly financial stress felt by many and allows you to see what money you have available to spend on the things which really make you happy in life.
Opportunities to start budgeting include the use of apps, templates or courses.
Budgets are the cornerstone of financial success. A solid plan allows you to set goals for yourself and create a financial plan, reducing the need to live pay check to pay check.
- Make More Money
Once you start tracking your finances, it is easy to see where your sources of income are, and whether these need to increase. If you need to increase your income in order to meet your financial goals, consider increasing your responsibilities at work. This may include increasing your hours at work, working towards bonuses or saying yes to a promotion you have been putting off.
If your day job is still not doing it for you, there are more and more options to make money on the side. Picking up part time or casual work, starting an online business or advertising your skills on job sites are some simple side hustle ideas. Think about your skills and interest and go from there.
No matter what you decide to do in order to boost your monthly income, always keep your financial goals in mind and let them guide your choices. There is no excuse to stay broke.
- Set Financial Goals
Setting realistic and achievable financial goals will serve as a real source of motivation for you to get your finances in order. Common milestones may include getting out of debt, paying off student loans or saving for a new car, holiday or property.
Research shows that no matter what your goals are, if they are written down and designed using the SMART (Specific, Measurable, Actionable, Realistic and Timely) method, there is a higher rate of success. By setting clear goals and intentions, you will be able to move from where you are, to where you want to be and start making real progress.
- Track Your Net Worth
If you want to have financial success, measuring your net worth is a must. Net worth refers to your assets minus your liabilities and is essentially, a measure of how much an individual is worth. Tracking your net worth allows you to assess where you are financially and provides an overall outlook of your financial health.
Here is a simple algorithm to calculate your net worth:
net worth = assets – liabilities
Update your net worth at regular intervals, either every month or every quarter, so that you can track how your net worth is increasing or decreasing as time passes.
- Build An Emergency Fund
Having an emergency fund of expenses, typically around six months’ worth, is one way of taking the stress out of your finances should the unexpected happen. Financial experts recommend accumulating an emergency fund of three to six months of discretionary expenses. Depending on your sources of incomes and your expenses, this number may need to vary to suit your lifestyle.
Having an emergency fund takes away the fear surrounding emergencies and unexpected events, removing the stress of how these will be taken care of financially.
- Get Out Of Debt
Remaining in debt does nothing positive for your overall financial health. By creating a plan to get out of debt now, you are helping your future self and reducing your overall worries. Committing to a plan to reduce and remove your debt begins with focussing on your own financial education.
Once you have an idea of how much you get back each month after your debt has been paid down, including interest, the option to live debt and worry free becomes too good to pass up and instead, should become your top priority.
- Save For Retirement
It’s never too early to start thinking about your retirement, in fact, the earlier the better!
In this day and age, there are many different ways to save for life after the workforce. The easiest place to start is with your employer and their plan. In some situations, your employer may offer you the option to match your contributions.
As a rule of thumb, invest up to the match at least and increase slowly from there if you can afford to. As your budget allows you to, save more or up to the maximum of available contributions. As a younger employee, the advantage of having time of your side will allow you to set yourself up for a successful and stress free retirement.
To learn about the basics of retirement saving, articles such as Retire Inspired by Chris Hogan can be incredibly helpful.
- Check Your Credit Score
Being aware of the existence of your credit score and how to access it is an incredibly valuable asset as you set up to learn more about and take control of your finances. Sites such as www.creditsavvy.com.au allow you to check your score regularly, review your reports and see whether the information listed is correct and accurate.
In the case where there have been changes made which do not reflect your spending behaviour, you can easily identify whether you have been the victim of identity theft and take immediate effect to limit the consequences.
- Master Your Mindset
Like most things in life, what you believe will become your reality. The same can be said about your financial stability and position.
Feelings of being broke and complete scarcity usually surrounds you when you don’t know anything about money. But by developing your knowledge everything gets better.
- Build Assets
Focus on building your assets as you increase your confidence and your financial position. Assets are the key to building wealth as they work for you, increasing your overall net worth.
The process towards financial security; build wealth, reduce debt, acquire assets, will allow you to watch your net worth grow. Adhering to simple, easy to follow rules is the best way to watch your wealth grow!
Keep focusing on your financial goals and where you want to be. It can pay off, big time!