Improving your financial health is one of the most important challenges that you face as a wage-earning, tax-paying adult. The problem is, it’s also an incredibly daunting task. What records do you review? How do you devise strategic financial plans? When should you be making certain investments and opening specific savings accounts?
If you don’t know where to start in this instance, don’t panic because help is on the way.
Here are six simple things that you can do to improve your financial health:
Spend less than you earn
Regardless of how much you are paid each month, if you want to stop living from wage packet to wage packet, then you must resolve to spend less than you earn. True, this is easier said than done, but it can be achieved by making prudent cuts to your spending habits. If you are keen to really address how much you are cutting, it would be wise to look at every area of your life including your living situation. You might find that you are paying way more for housing than you can currently afford to. Simply by locating to a new area, on the outskirts of town, for instance, could see yourself saving a lot more.
Create a budget
With a budget in place, you will be able to retain a tighter grip on your spending and you will be able to track where your money is going.
To create a successful budget, you must:
- Calculate your expenses
- Determine your income
- Set savings and debt payoff goals
Pay off your credit card debt
Should you carry credit card debt around for too long, you will find it mightily difficult to improve your financial health. This is because of the simple fact that your interest rates will continue to inflate and, as a result, you’ll constantly find yourself having more debt to settle.
Boost your savings
According to bettermoneyhabits.com, boosting your savings is the smartest thing that you can do in your bid to improve your financial health. Storing 10% of income away each month will ensure that you remain covered whenever financial emergencies and disasters strike.
Organise your financial data
Organising your financial data is important for a number of reasons. One, it will allow you quick and easy access to your records, which will in turn permit you to monitor your accounts and keep a tighter grip on your spending. Two, it will keep you well-informed when it comes to the amount of tax that you owe/are owed.
When it comes to organising your financial data, be sure to:
- Set up a robust and easy-to-access filing system
- Reconcile and file all of your receipts
- Keep your investment papers safe
- Store pay stubs for one year, store tax returns for three years, and store claim documents for at least seven years
Pay your bills
Above all else, paying your bills on time and in full is the most important task that you face in your bid to retain a clean bill of financial health. Missing payments could result in you having to face a whole host of cashflow complications going forward, such as your credit score being damaged or your interest rates soaring. Be sure, then, to stay on top of your payment deadlines, even if this means taking out short term loans to cover certain payments.
If you put all six pieces of the above advice into practice, you’ll be sure to improve your financial health in no time.