Are you happy with your financial situation right now? If not, don't fret; you aren't alone! Most people aren't satisfied with their finances and are looking for ways to improve their situation. If you want to improve your financial situation, you can start by focusing on these six principles that will help get you back on track and get your money working for you instead of against you.
Balance Your Finances
Keeping your finances in check can mean many different things, depending on where you're financial. An excellent place to start is by looking at your consumption schedule —the amount of money that goes out each month—and then thinking about how much money comes in each month. If your expenses are greater than your income, it might be time to adjust. Once you've done that, it will be easier to find ways to improve your financial situation.
For example, you could get a raise or make extra cash with an outside gig. Or maybe you need to cut back on expenses like cable or groceries. Once you've identified areas for improvement, plenty of resources are available to help you out, like budgeting apps, personal finance books, and other tools. You can check out Lendstart: financial decisions simplified to guide you on how to manage and fix your finances. Remember: The sooner you act, the more likely you will see results!
Consolidate and Pay Off Your Debts
If you're carrying high-interest credit card debt, it makes sense to consolidate those debts and pay them off. If you have several different accounts with different APRs, consolidating your debts is a great way to lower your average interest rate. In other words, if you owe money on credit cards at 15%, 18% and 19%, then adding them all together and paying off that unified loan will result in much lower total interest costs over time.
However, make sure you don't transfer balances from one high-interest account to another; instead, aim for a single low-rate account. Debt consolidation also helps you focus on a single payment each month instead of juggling multiple payments. Also, be aware that some lenders charge origination fees when they set up new loans or lines of credit. So be sure to factor these fees into your budget when comparing rates between lenders.
Automate Your Savings
The easiest way to improve your financial situation is by automating your savings. Decide on an amount you'd like to save and create a dedicated savings account at a different bank than your everyday accounts. Don't tell yourself how much you can spend—that doesn't work, especially if it's something like $50 per week. Instead, set up a direct deposit from your paycheck into that account. You won't even miss it because you won't see it.
If you have extra money left after paying all your bills, let it be part of your savings. You don't need to think about saving anymore; keep living as usual and let your money grow for you. Such a habit will also help you live within your means, which is key to improving your financial situation. It's important to note that when we talk about improving our finances, we are not talking about getting rich quick or making risky investments. We are talking about building wealth through smart investing and spending habits.
Build Good Credit Score
You probably know that a good credit score is essential for your financial situation, but did you know that there are six components of your credit score? A good credit score can help you obtain lower interest rates when applying for a mortgage, car, or personal loan. It's also valuable for insurance companies in setting premiums and for landlords to decide whether to rent a property.
Without a good credit score, it will be more challenging and costly to take out loans or pay for big-ticket items such as a house or car. A good credit score can save your day when you least expect it. For example, if you need to borrow money quickly because of an emergency, having a high credit score could mean getting better terms on your loan.
Outline Your Financial Goal
Before improving your financial situation, you need to know your financial goals. Are you looking for a job that pays better? Do you want to invest in real estate? Or do you want enough money saved so that it won't blow your entire budget when an emergency hits? It will be easier to get there once you know where you're going with your finances.
You might even find that one of your goals has changed. That's okay! There's no wrong answer here. It all depends on where you see yourself down the road and how much work and collaboration you're willing to get there.
If you are in debt, it can seem like there is no way out. But even if you're staring at a mountain of bills and overdue notices, you can still take steps to improve your financial situation. There is hope—you need a plan. An excellent first step is identifying which of your expenses have room for adjustment and then making those adjustments as soon as possible. You may not be able to pay off all your debts immediately, but you can find yourself on a path toward better financial health with some hard work and perseverance. Seeking help from reliable financial experts or support groups is another great option. With so many options available, there's no reason why you can't begin improving your financial situation today!
This article was written in cooperation with Lendstart.com