Standard disclosure: we may earn money from the companies mentioned in this post. Visit my disclosure page for more info
When it comes to our finances, we can get a little sensitive. Either we’re doing well and don’t want to seem smug, or we’re struggling a little and would rather nobody know about it. We never really seem to be in the middle, it tends to tip either way. But just because you’ve fallen into one financial camp or the other over the years, doesn’t mean that has to be where you’ll stay for life.
As our situation changes, our finances can change too. They can improve or decline naturally over the years, but you also give them a little push and help them to stay in the camp you like firmly – the good one.
With the New Year approaching, it might be time for you to take action. If you’ve been bumbling along with your finances up until now, it might just be the time iron them out and do what you’ve got to do to set yourself straight. It might not be that straightforward, but if these ideas should give you a head start at getting your financial life off in the right direction.
Work Out What You Spend
First of all, you’re going to work out where your money goes. You probably have a rough idea of what you spend each money and on what, but you might be surprised at what the real figures are. If you’re spending far too much each month, by looking at where all of the money goes, you can start to work out where the problem areas are. Then, you can start to do something about them.
Drill Down On Your Earnings
Next up, it’s time to do the same with your earnings. If you have one job with a set salary, then you probably know what you earn each year. But, say your annual salary is $30,000, do you know exactly what that equates to each month after all of your deductibles? Understanding this, along with how you spend, could open your eyes to the state of your finances. If you have more than one source of income, you need to sit down and finally work out the overall total.
Now that you know what you’re spending and what you’re earning, it’s time to work out some financial goals. What is it you want to achieve with your finances? Maybe it’s just to spend less than you make, save a little each month or even to be able to buy a house. Whatever it is you want to so, write it down. It’s time to start working towards that end financial goal.
Cut Out Or Cut Back
To achieve your new financial goals, you going to want to make changes. Having a clearer view of your financial situation now allows you to do that. What expenses or payments can you cut out of your financial life, if any? Do you need to spend $20 a week of coffees? Could you reduce your phone or car payments? Try to reduce what you devote to each area, or stop spending on it at all if you can.
Now that you’re cutting back, you’re going to want to be cautious with how you spend your money. If you’re used to being frivolous and buying what you want, it’s time to change your behavior. Think before every purchase you make. If you feel an impulse, wait five minutes before you buy – it might just change your mind.
If you do find that you struggle from month to month, you might want to think about any precautions you can take. Especially if you have any big payments coming up, or if any unexpected bills come your way and you never have any money spare to cover them. Searching for payday loans direct lender bad credit might just help you out when you need financing for a short period.
Pay Off Your Debts
If you are doing okay from month to month and you’re starting to get a bit of free money back, then it’s time to start thinking about paying off any debts that you have. You’re going to want to do this before you think about making savings or investing your money in any other purchases. First of all, you’ll want to tackle the debt with the highest interest rate and then go down from there.
Work On Your Score
Then, you’re going to want to work on that credit rating of yours. It might be in an okay state, or it might be struggling a little. Either way, there are things you can do to improve your credit score. Paying your bills on time and keeping your credit card balances low will help, but you can slowly get there over time.