If you are someone who is always struggling with your finances, do take some time out to analyze why things are not working out the way you want them to. Self-awareness and a good understanding of how and where your money goes will help you chart your financial course better.
A few smart lifestyle changes and thrifty habits can help you spend less and save more. Costly debts are debilitating to your finances. Pay them off as soon as possible.
Here are a few tips for you to improve your finances.
1. Deal with Your Credit Cards
Credit cards are useful, safe and help you build credit, provided you know to use them properly. If you do not pay the credit card balance in full every month, very soon you will rack up fees and end up paying high interest.
If you pay only the minimum balance every month, the compounded accruing interest will very soon make it the costliest debt you have.
So, when aiming to clean up your financial act the first thing you need to do is pay off the remaining credit card debt. Remember that responsible use of credit cards is reported and will help you build a good credit score.
2. Use Cash
E-wallets and mobile payments are here to stay. But the next time you go shopping carry cash with you.
Studies prove that you tend to spend less when you have to pay in hard cash. There is something that prevents us from emptying our wallets. We hold back and refrain from blowing it all up at the end of season sale.
3. Plan Your Shopping List in Advance
Weekend grocery shopping can prove to be expensive if you do not plan in advance. Make a shopping list and include all the groceries you need for the week or the month. This will save you unnecessary trips in between, save gas and also helps you plan meals better.
4. Cook at Home
This is a no-brainer. Eating out, takeaways and ready-to-eat meals are much more expensive than home-cooked meals. They are also less healthy options.
If you find cooking at the end of a long and tiring day a pain, try slow-cooker meals. They are easy, delicious and make for a very appetizing welcome when you walk in at night.
Weekend cooking is another option. Cook multiple portions and freeze them. When you are short of time all that you need to do is pop them in the oven and you have a healthy and hearty meal ready in no time.
5. Track Your Debts
To be and remain debt free, you need to keep a hawk’s eye over your debts. There are many of us who forget about pending bills and other monthly payments. We wake up only when things have spiraled out of control. Bounced cheques and delayed payments can dent your credit score.
Keep track of all outstanding debts. Any extra cash you have on hand has to be funneled into negating your debt burden.
Manage your debt, ask for waivers wherever possible, lower your credit card fee and haggle for better rates. Banks will be willing to negotiate if you promise to repay in full, on time.
6. Lock up Some Cash
Personal finance experts do not recommend this. But locking up some of your savings will ensure you are not tempted to spend.
Gold and silver help preserve wealth, are a tangible investment and have historically retained value. Buy gold or silver coins as long term investment. Do not sell them off in a hurry because the longer you hold them the more valuable they become.
7. Stop Being Materialistic
Shift your focus to the simple pleasures of life. You need not ditch your expensive watch or designer dress, but being less materialistic will do a world of good to your bank balance.
But never let money, or the need to save it, suck out the joy of living. Spend on things that will help you enjoy life better. Travel and see the world. No amount of money in the bank can compensate the pleasures of experiencing foreign cultures and seeing unfamiliar sights.
So spend on the good things in life.
8. Save for Celebrations
Christmas, anniversaries and birthdays are occasions we enjoy being generous. Mark the dates on the calendar for this year, and set budgets for the big days. Save up and have fun splurging your ‘cheer money’ on those happy days.
If you are planning to gift something expensive to your girlfriend, save up for it. Also, check with the store you plan to make your purchase from in advance if they have any special offers or promotional programs on.
9. Don’t Overspend on Children
Parents spend a bomb on kids, enrolling them in a variety of activity classes. Extracurricular classes, education, and child care can add up to a major expense. If you do not keep a tab on spending they can really upset household finance.
Keep activities to a minimum. Enroll your kids in classes they are interested in and enjoy going to. Plan classes in same part of the city or closer home so that you do not have to burn fuel and energy running from one end of the town to another.
Also, ensure your little ones go to the same institutes or nearby ones so that pickups and drop-offs are easier for you.
Keep in mind that children do not require expensive entertainment. Your presence and involvement will help your kids have all the fun they possibly can.
10. Have a Smaller Home
A home is one of the biggest buys of an individual’s life. Ensure you make a smart choice.
Where real estate is concerned all that matters is location. Buy a house in a nice locality that has good potential to appreciate in value over time. Proximity to work, schools, and hospitals is an important factor you need to take into consideration. Also, the area should give you a lifestyle and cultural experience that you enjoy.
A smaller house will mean lower maintenance expenses and taxes. So think well and long-term before making big-ticket purchases.
A debt-free life will give you peace of mind but do not obsess over saving every penny. Good money habits and timely action will help you achieve it, slowly and surely.