The 10 Great Strategies to Immediately Improve Your Personal Finances
1. Know your current financial situation.
Before you can make plans to save for anything, whether it’s your kids’ education, retirement, or buying your dream home, you need to know where you stand financially today. You may need to go to the trouble of hiring a financial planner if you don’t know how to create a financial plan. If you know how to create a financial plan, you can save a lot of money by hiring a financial planner.
2. Back up regularly.
Getting into the habit of saving is a good virtue. You will never know when you urgently need that extra cash when unexpected events occur such as a job cut or a loved one falls ill requiring extensive medical attention resulting in high medical costs. As a guideline, it is a must that you have set aside 3-6 months of your current salary to meet emergency needs.
3. Control your cash flow.
No matter how wealthy you are, you need to be able to control your cash flow. The simple rule is that what goes into your pocket must be more than what comes out of your pocket. You need to know what item earns you income and what makes you spend.
4. Reduce your expenses
Start by tracking your daily, weekly, and then monthly expenses. Find unnecessary expenses and eliminate them. A good example of this is paying for subscriptions to magazines you don’t read. When you’ve identified all those items that aren’t worth your dollar, you can drastically reduce your spending by 25-30%. It is advisable to have only one credit card in order to better follow your expenses. Be sure to pay the full amount by the due date of every credit card bill before it snowballs into unbelievable debt.
5. Review your debts
As a general rule, your debt should not exceed 30-35% of your total income. Gambling and vices are good candidates that can get you into debt. Poor money management can also put you in debt, even though you may have hit the $2 million lottery or inherited great wealth from your relative.
6. Be thrifty but not stingy
Buy goods only when they give you value for your money. It’s wise to know when to buy something quality and pay a premium over when to buy something less branded but still serves the same purpose as a branded item. If you were to always choose the items based on cheap prices, that item might break down in a short time and force you to buy another one, this will lead you to more expenses than you expected. originally. You will also be labeled as a cheapskate, unwilling to spend money when absolutely necessary.
7. Review your investment portfolio
If you have invested in stocks, unit trusts or the various funds, you want to review them regularly. Your review period can be quarterly, semi-annually or annually. For example, when you have done your quarterly analysis and find that the stock of the company you have invested in is not giving your target returns based on financial numbers or external interference, then you would want to replace that stock with more effective societal action.
8. Educate yourself financially
There’s a wealth of financial information out there and it’s free when you surf the internet or go to your local library. You can attend seminars, read books, read newspapers and listen to audio tapes which are some of the ways to gain more knowledge.
9. Be generous
There is a famous saying “You get what you give”. When you are generous, some how the spiritual forces know it and reward you many times over. When you give, there is a natural tendency for the other person receiving to want to give back to you.
10. Pay yourself first
Before paying all your monthly expenses, you must cultivate the habit of paying yourself first. If you have a day job, as far as payday goes, you can start putting, say, 5% of your salary into another bank account. You can gradually increase this percentage when you have more take home pay or feel you deserve more reward. Many people pay themselves last. When they have paid other expenses, they will have nothing to pay themselves.