I know this might not sound sexy - but you need a budget. Thats #1.
Start with a budget. Income vs expenses. See how much you make vs how much you spend. (download our free budget template here - best used on computers) Focus on cutting back where you can + adding additional income like a raise, side hustle, or a second job.
I opted for simplicity initially. If I'm already working a '9-5,' I start by negotiating for a raise. Once I secure that increase, I consider taking on extra hours, exploring a side hustle, or if needed, even getting a second job—anything to strengthen my income.
When I feel I've maximized earnings from these avenues, established a budget, set up an emergency fund, & built a modest savings cushion, that's when I shift focus to learning about investments in income-generating assets. 😎
In terms of cutting expenses, here's what worked for me: I cut unnecessary subscriptions like Sling TV & Netflix. I also negotiated discounts on Adobe services & re-evaluated my Wi-Fi package. After finding a $25/month deal online for the same service I was paying $50 for, I reached out to my provider and secured the same offer for my account.
Another thing I did was, make simple yet impactful changes at home. I switched to energy-efficient light bulbs in every room, upgraded to energy-saving extension cords, & became mindful of leaving electronics plugged in when not in use. I also became vigilant about unnecessary energy consumption—turning off lights during the day when sunlight suffices & powering off the Wi-Fi at night.
Additionally, I contacted my cellphone provider & obtained a $10/month discount for 12 months by calling & inquiring about available promos or discounts.
To cap it off, I set a weekly food budget of $60, ensuring I manage my expenses effectively.
2. Take the proactive step of setting up automatic payments to your savings account—it's a game-changer. I allocate a considerable 60% of every income I receive to savings, & here's why you might consider doing the same.
Automating savings ensures consistency & discipline. When you set a fixed percentage of your income to go directly into your savings, you're creating a financial habit that needs minimal effort. It's a form of paying yourself first because you're prioritizing your financial future before any discretionary spending.
This strategy helps build a strong financial foundation. Whether it's for emergencies, future investments, or achieving specific financial goals, consistently saving a significant portion of your income contributes to long-term financial security. Also, automatic savings eliminate the temptation to spend impulsively. When the money is transferred directly to your savings account, it's out of sight, out of mind, making it less likely that you'll dip into those funds for non-essential expenses.
Think of this as a way of 'future-proofing' your finances. Life is unpredictable, & having a savings buffer gives peace of mind & financial stability in times of emergency.
So, take the hassle out of manual savings & set up automatic transfers—it's a simple yet powerful strategy to strengthen your financial well-being.
3. Understanding the distinction between WANTS and NEEDS is crucial in shaping a healthy relationship with money. Many people fall into the trap of 'pre-spending'—they allocate their money mentally before it's even in their hands. By recognizing & prioritizing your needs over wants, you gain more control over your finances.
Take a step back & look over your expenses. Differentiate between what is essential for your well-being—like shelter, food, & utilities—& what falls under discretionary spending—like entertainment, luxury items, or dining out. Yes, it's natural to indulge occasionally, but consistently spending on wants before addressing needs can lead to financial stress.
One approach that significantly impacted my saving habits was adopting the mindset that nothing is guaranteed. Job security is momentary—even high-ranking positions aren't immune to sudden changes. This realization fueled my determination to be financially mindful. I aimed to build a safety net, recognizing that anyone can encounter unexpected events that disrupt income or stability.
Thinking 'they can take this away from me at any moment' forced me to save diligently. It's about securing your future regardless of external circumstances. Having someone else control essential aspects of life, such as your livelihood & where you lay your head at night, doesn't align with the freedom many of us desire.
By acknowledging this uncertainty & prioritizing financial stability, I became more deliberate with my spending. It allowed me to create an emergency fund, invest in my future, & gain a sense of control over my financial destiny. This mindset shift empowered me to make more conscious choices, balancing present desires with long-term financial security.
4. Developing better financial habits is key. Start by prioritizing timely bill payments—it's a fundamental step in securing your financial stability. Consider setting up reminders or automated payments to ensure you never miss a due date.
When I began my financial journey, YouTube became an invaluable resource. It's a treasure trove of information covering a vast array of financial topics. Whether it's understanding investment strategies, learning about budgeting tools, or comprehending complex financial terms, YouTube & Google are incredible educators. Take advantage of these platforms—they're accessible, free, & offer insights from experts & experienced individuals in the field.
In addition to online resources, consider diving into personal finance books. They provide in-depth knowledge & actionable advice on various financial aspects. Books like 'Rich Dad Poor Dad' by Robert Kiyosaki, 'The Total Money Makeover' by Dave Ramsey, or 'Your Money or Your Life' by Vicki Robin & Joe Dominguez can offer invaluable insights & strategies to improve your financial habits & mindset.
Improving your financial habits isn't an overnight process. It takes consistency, commitment, & a willingness to learn & adapt. Utilize the wealth of information available, implement what you learn, & gradually build a solid foundation for your financial future.
5. Get your credit together
This step holds significant weight in your financial journey. Take a moment to visit Experian.com & dive into your credit score & report. Understanding your credit health is crucial, a poor credit score can have substantial financial implications.
A low credit score can impact your ability to secure loans, mortgages, or favorable interest rates. It might even affect your chances of renting an apartment or getting approved for certain job positions. It's not just a number; it's a reflection of your financial dependability.
By evaluating your credit report, you gain insights into what's affecting your score. It could be late payments, high credit card balances, or errors that need correcting. Addressing these issues can help improve your financial standing, which saves you money in the long run.
Remember, your credit score isn't set in stone. Taking proactive steps to improve it, like paying bills on time, reducing debts, & disputing inaccuracies, can steadily enhance your financial credibility. A solid credit score opens doors to better financial opportunities & saves you from unnecessary expenses down the road.
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