A lot of people are aiming to be better with money, so they can earn more, save more, and be more financially secure. Whether you’re making a resolution to improve your financial situation, or whether you’re overhauling your financial habits, the basics remain the same. Here are some of the best tips to help you get ahead financially.
Get Paid What You’re Worth And Spend Less Than You Earn
This might sound simple, but a lot of people struggle with this first rule. Make sure that you know what your job is worth in the marketplace. Conduct an evaluation of your skills, productivity, job tasks, contribution to the company, and going rate inside and outside the company, for what you do. You can use a wage calculator to help you work out what you’re earning in a way that makes sense to you. Being underpaid by even a small amount each year can soon have a significant effect over the course of your working life.
No matter how much or how little you are paid, you will never be financially secure if you are spending more than you earn, especially on credit cards. It’s often easier to spend less than it is to earn more, and by making some effort to cut costs in a few different areas can result in savings. This doesn’t always have to involve making big sacrifices.
Stick To A Budget
An important step to think about when you’re trying to improve your financial habits and success is budgeting. After all, how can you know where your money is going if you don’t have a budget in place. You can’t set spending and saving goals if you don’t know where your money is going every month. Set up a budget, regardless of how much you earn. You can use apps, spreadsheets, or a notebook to write down everything that you earn, and everything that you spend. When you can see exactly where your money goes, you can easily the areas where you can makes changes, whether that’s swapping to a cheaper supermarket, or cutting out expenses like takeaway coffee.
Pay Off Credit Card Debt
Credit card debt is the main obstacle to getting ahead financially. Those plastic cards are very convenient to use, and it’s all too easy to forget that it’s real money you’re spending when you’re getting a card out to pay for any purchase, whether large or small. No matter how strong your resolve is to pay off the balance as quickly as you can, the reality is that we often don’t, and end paying a lot more for things that you would have if you had just paid in cash instead.
Contribute To A Retirement Plan
If your employer offers a 401(k) plan or any other type of employer-sponsored retirement savings program, you should be thinking about contributing to it if you can afford to. With many 401(k) plans, your employer will contribute the same amount that you put toward your account up to a certain percent. This is often called an employee match. If your employer doesn’t offer a retirement plan, you should find a private plan to invest in, so you can start saving up for your retirement.
Have A Savings Plan
You will definitely have been given this advice before. Pay yourself first. If you wait until you have met all of your other financial obligations before you check what is left over for your savings, it’s likely that you won’t ever manage to build up a healthy savings account or investments. Resolve to set aside a minimum of 5% of your salary every month for savings before you start paying for anything else. Better yet, if you can, set up your account so money is automatically deducted from your paycheck and deposited straight into your savings account. If you never see the money, you won’t miss it.
If you’re paying into a retirement plan and a savings account, and you can still manage to put some money into investments, all the better for you and your finances. Whether you invest in stocks, real estate, or something less traditional like art, you can diversify your portfolio and earn money in more ways to help you generate more savings and income.
Maximize Your Employment Benefits
Employment benefits, like a 401(k) plan, flexible spending accounts, medical and dental insurance, and others, are worth a lot of money. Make sure you are making the most of yours, and take advantage of any benefits available to you that can save you money by reducing taxes or out-of-pocket expenses. Look for benefits like healthcare plans, insurance, or savings with other businesses. All of these can be very helpful for you to reduce your own expenses.
Review Your Insurance Coverages
Too many people are talked into paying out far too much for life and disability insurance, whether it’s by adding coverage like this onto car loans, buying whole-life insurance policies when term-life makes more sense, or buying life insurance when you don’t have any dependents. On the other hand, it is important to make sure that do have enough insurance in place to protect any dependants that you have and to protect your income in the case of death and disability. UK broker Reassured have created this useful life insurance calculator to help you determine the level of cover you require.
Update Your Will
Shockingly, only a small portion of people have a will in place. If you have dependents, no matter how little or how much you own, you must have a will. If your financial situation is reasonably simple, you can even do your will yourself with software. If you need more help, a lawyer can advise you. To protect your loved ones, you should think about writing a will.
Keep Good Records
If you aren’t careful and thorough about keeping financial records, you are probably not claiming all your allowable income tax deductions and credits. Get a system in place now and use it all year to help you keep track. It’s much easier to do this now instead of scrambling to find everything when it’s time to file your taxes and end up missing things that might have saved you money.
Create A Financial Calendar
If you don’t trust yourself to remember to pay important bills on time, pay your quarterly taxes, or pull a credit report on a periodic basis, then it can help yo set appointment reminders for yourself for these important money tasks on your to-do lists. Do this in the same you’d set reminders for a car tune-up or a doctor’s visit. Note importance on a physical calendar or set reminders in your phone.
Check Your Interest Rate
If you have outstanding loans, work out which one you should be paying off first. Aim to pay off the one that has the highest interest rate first.
If you’re opening a savings account, you should be opening one with the best interest rate.
Credit card debt is a big problem, due to compound interest rate.
Basically, you need to pay attention to interest rates to help inform you of which debt or savings commitments you ought to be focusing on.
Track Your Net Worth
Your net worth is the big difference between your assets and your debt. It’s essentially the big picture number that will tell you where you stand financially. Keep an eye on your net worth, and it can help you on top of the progress that you’re making toward your financial goals and can warn you if you’re backsliding at all.
Consider Using Only Cash
If you find that you’re consistently overspending, switching to using only cash can make a big difference. The problem with using a card, whether credit or debit, is that the money you’re spending doesn’t always feel real. If you overspend on cards, leave the cards at home, and only use cash instead. By physically handing over cash, you might find that you have more awareness of what you’re spending, and are less tempted to spend more than you can really afford to. Try this for a few days and see if it works for you. If it does, you can use only cash in situations where you know you usually go wild on your card, like a night out, or on vacation.
Take A Money Minute Every Day
Staying on top of your money on a day to day level can really help you keep better track of any income and outgoings. Set aside one minute of each day to quickly check on your financial transactions. You can check your accounts to see how you’re progressing towards your financial goals, which can help you to set the tone for the rest of your day. By checking your accounts, you can also make sure that any bills or other obligations have left your account as they should, and you will quickly spot any irregularities, like a double-charge, an over-charged bill, or any signs of fraud or other suspicious activity on your account.