Personal finance is a subject that is dominating the headlines at the moment, with the cost of living rising and many families still coming to terms with the impact of the pandemic. Of course, taking control of your finances is beneficial, but it’s not always easy to identify ways to improve your situation.
In this guide, we’ll discuss accessible, realistic strategies you can adopt to save money, reduce debts and start building towards a brighter financial future. Accessible Ways To Improve Your Financial Situation
1. Analyze Your Statements
The first step to take when you want to improve your financial situation is to analyze your statements. Open your online banking account or printed reports and take stock of where your money goes each month.
Many of us have multiple direct debits coming out of our accounts, and we place orders online, tap to pay, or make payments via apps. This can make it challenging to keep track of your outgoings. Analyzing your statements is an excellent way to identify areas where you can make cuts or even eliminate expenses.
You may find that you’re spending far more than you thought on buying clothes or groceries, for example, or perhaps you’re still paying for a subscription you don’t want anymore or a membership you haven’t used since a free trial ended.
2. Start Budgeting
Once you’ve been through your statements and have an accurate idea of where your money is going and how much you’re spending, you can start budgeting. Drawing up a monthly budget is a brilliant way to assume control of your finances and make plans.
You can use your budget to set spending limits, save money, and clear debts. Start with your income and then add a column for regular outgoings, for example, your mortgage or rent and utility bills. Add a third column for one-off expenses, which you will incur in the month ahead. This may include a partner’s birthday gift or a weekend away, for example.
Once you have all the figures in front of you, work out the difference between your income and total outgoings. Prioritize spending. Tackle high-interest debts first before you save, and try to save or pay off debts before spending money on non-essentials and luxuries. Update your budget as you go.
3. Seek Advice
Managing your finances isn’t always easy. If your debts are increasing, you’re interested in investing money, or you’re thinking about the future, and you want to start planning, research financial advisors.
Read reviews, ask people you know for recommendations, and take advantage of free consultations, online guides, and articles published by reputable websites. Seeking professional advice can help you to get your finances in order and reduce stress.
It’s helpful to have access to accurate information and to ask for tailored advice before you make big decisions, such as putting money into an investment scheme, saving for your retirement, or taking out a debt consolidation loan.
4. Look For Ways To Reduce Monthly Expenses
One way to save more money or clear debts faster is to look for ways to reduce your monthly expenses. This can help you to make your money go further and lower the risk of overspending.
First, use your budget to establish limits, for example, $50 per week on groceries or $100 per month on social plans, new clothes, or trips. Then, shop around for the best deals and offers on insurance premiums, products for your home, pet supplies, and groceries, and always compare prices before you buy.
Whether you’re planning a vacation, looking for auto insurance, or needing a new refrigerator for your kitchen, you can save a fortune by comparing prices online. If you use a comparison site for insurance, for example, you can set filters based on your requirements and preferences. You’ll be presented with a list of suitable offers, which will help you find the best value policy.
In addition, simple things like walking and cycling short distances instead of taking the car, cooking at home instead of ordering takeouts, and swapping dining out and going to the movies with friends for socializing at home can make a difference.
5. Reduce Debts As Soon As You Can
Most people have debts, but there is an important difference between having a mortgage and a credit card you pay off every month and having multiple loans, credit cards, and other debts that are increasing every month. If you’re up to date with loan and mortgage repayments, you have control of your credit, and you can afford the payments, there’s no need to worry.
However, suppose your debt to income ratio is rising. In that case, if you’re resorting to credit because you can’t afford to cover household bills or you’ve used a credit card or loan to cover emergency expenses, it’s wise to try to reduce debts as soon as possible. Try to avoid adding to your debt and pay off credit cards and high-interest loans as a priority.
If you’re paying massive amounts in interest, it can be incredibly difficult to make a dent in the amount of money you owe.
If you’ve reached a point where your debts are spiraling and you don’t know what to do, don’t suffer in silence. There is help available, and there are solutions. Seek advice. You may be able to consolidate your debts, start a debt repayment program or liaise with your creditors to reduce or prevent charges and penalties.
If you’re fortunate to have funds available to invest, it’s advantageous to research, explore different opportunities, talk to financial experts and experienced investors and establish your personal goals. It’s also important to set a budget and consider whether you’re looking for short or long-term investments.
Finally, take your time to weigh the pros and cons and calculate risks before deciding where to put your money.
Money worries are one of the most common causes of stress. If you’re trying to improve your financial situation, there are some very simple steps you can take. Analyze your bank statements, start drawing up a monthly budget and seek expert advice.
Try to lower expenses, set spending limits, and reduce debts as a priority. If you have money to invest, take your time to research, get advice, and explore different opportunities.