Improving Your Finances
I have come up with 8 simple ways you can start improving your finances today. These can help give you the push to start thinking even bigger and start thinking of more ways to improve your finances. But let’s not get to far ahead yet, try these 8 tips first!
Balancing a Checkbook (Even if you don’t write checks)
This seems so archaic and most people don’t really write checks anymore, but I am telling you it is very important. It’s easy for us to check our bank balance and think the amount shown is the amount we have. When in reality there are items you don’t realize are waiting to come out.
For example, I have several bills that are just on auto pay, but if you are not tracking if they have actually cleared your account they could be in limbo when you think it has been paid. Then you think oh I have $80 in my account when really maybe you only have $10 once that clears. The other thing balancing a checkbook will help, is seeing double payments. What if your electric bill came out twice? Would you really notice it right away?
For those of us who do still write the occasional checks, it is important to know if they have cleared or if they are still out in limbo land. I don’t write checks often but when I do it is usually for my daughters’ school. I like to write checks for this in case it gets lost I can replace it easily or if something is in dispute, I have proof something was paid. However, depending on the purpose of the check it can take months before they deposit it. By then I have actually forgotten I had written the check and it’s a big surprise when it clears my account.
And for my online Target shoppers. Have you noticed that Target does not charge your account until an item actually ships? I had pre-ordered a DVD because I was so excited for it to come out. I used my Target debit card to pay for it and waited the 3 more months for the DVD to come out. What I didn’t realize is that the charge would not come out of my bank account until it shipped 3 months later. That is plenty of time to forget about a $20.00 charge that wasn’t in my account but in my mind already cleared.
So just because you do not write a physical check, it is still a great idea to balance and reconcile your accounts daily. If you don’t know how to balance a checkbook, here is a link to Huntington to get you started!
Create a Budget
You need to be able to tell yourself where your money is going. Some people find a budget constricting, but just the opposite. It will end up giving you so much freedom in the end. You will know exactly where your money is going and if you have extra money to go somewhere else. You can read my post about creating a basic budget here. This will make the largest impact on improving your finances.
Have a Money Goal
What are some of your short term and long term goals when it comes to money? Do you have credit cards you want to pay off, student loans, perhaps your mortgage? Get really clear and specific about your money goals. Make a plan of action to reach them. 42% of people that actually write their goals down achieve them!
If you want to pay off student loans in 5 years, how does that math break down? Get very specific about your money goals, make a plan of action, and put it into action! Place your goals somewhere you will see them on a daily basis. Remind yourself what you are working towards.
Create an Emergency Savings
Life happens and sometimes we have to spend money on emergencies that we were not expecting. These sudden expenses usually mean adding to our credit card debt. However, that does not have to be the solution. You can avoid having credit card debt by taking the steps now to create
Set up a Sinking Funds Account
Sinking funds are to cover those expenses that you know are coming up but they are not consistent. For example, vehicle registration once a year, trash bill every three months, property tax, etc. These expenses are not emergencies, so please don’t use your emergency savings for them.
By taking the time to set up an account for these expenses, you will avoid the dread when you get that bill in the mail. You won’t have the temptation to put them on a credit card. Read my post on Sinking Funds to learn more about them and how to set them up and improve your finances.
Lower Your Debt to Income Ratio
Your debt to income ratio is worth % of your credit score. Basically, it is the total amount of debt you have compared to how much money you make. Ideally, your debt should not be more than 35% of your income. The lower the ratio the better off you will be. Focus on paying down some debt to bring down your ratio, or even better, find ways to increase your income too!
Read
This may sound odd at first since we are talking about finances but hear me out. A large part of how we think about our finances and life, in general, has to do with our mindset. Our mind plays such a larger part in all our decisions, even when we don’t realize it. So if you need some help getting into a positive state of mind find a book. Go to your library, or find the app to your local library and start downloading books.
Also, there are so many great financial books out there as well that could help get you on the road to a better financial life. Maybe books aren’t really your thing? Find more blogs like this one and just absorb as much information as you can. The world is full of so much free knowledge if we just take the time to find it!
You can also head over to my post about Money Mindset and download your free Money Mindset Workbook!
Start a Side Hustle
No one really wants to work more than they are right? But if you feel like you are struggling with your current finances and not getting anywhere, perhaps it is time to make that sacrifice to improve your finances. Push yourself to work hard at getting where you want to be and take comfort in knowing once you reach that goal, you can go back to normal. Look around, there are so many ways to make extra money online and in person.
Small but Mighty
These 8 tips to improve your finances are simple. They do not take weeks of planning and can be implemented today. They will make a large impact on improving your finances!
