Who doesn’t want to improve their financial status and become better at managing money? In fact, most new year resolutions feature better financial wisdom in one form or the other. This includes things like paying off debt, cutting expenses, saving more and investing it and improve their overall financial health.
Yet many of these lofty ideals fall by the wayside, as the year progresses. In order to achieve many of your other resolutions like invest in your health, get a gym membership or travel more, you need to be in control of your finances. Most people suffer on account of poor financial life choices and mismanagement, you can break free from this vicious cycle by following these simple and easy tips:
1.Live by a budget
A budget helps you determine a balance between your income and expenditure. Financial goals are all very well but you can’t achieve anything if you don’t have the means to do it, or if you don’t have any money left at the end of each month.
Analyse your income and expenditure to see if you have enough left towards the month-end. If you don’t, then it is time to cut down on your spending and find ways to increase your income. For instance, finding a side hustle, like a blog or a weekend job. There are many free apps that help you budget better and stay on track as far as finances are concerned.
2.Create SMART financial goals
What is it that you want to achieve with financial planning? Do you want to pay off some student loans? Is it a car loan that you want to settle? Or do you want to save enough for a holiday?
Next, you can break down your financial goals however you like in terms of milestones. You need to come up with a figure that you should save each month to make that goal. Use the SMART technique to achieve your financial dreams.
S: Be Specific: What you want to achieve and what is the deadline. For instance X amount by 31st December 2020.
M: Measurable- Define the amount you need to set aside, be it weekly, monthly or bimonthly.
A: Attainable: Is your goal achievable? What can you do to make it happen? Whether it is a freelance gig or side-hustle, you need to figure out a way to make it happen.
R: Realistic: Is the goal or target realistic? Make sure you are not going overboard with your goals.
T: Timebound: By when will you achieve this goal? Is it a couple of months, a year? Break down a longer-term milestone into several, shorter term ones to stay on track.
3.Create a contingency plan
Of course, not everything goes to plan every year and there will be occasions when you need emergency funds, for instance, a health emergency that is not covered in your insurance, a hike in rent or a holiday that you feel like taking.
If you save a certain amount each month, it is a good idea to earmark a small percentage of that sum for a contingency, bearing in mind your financial goals.
However, if you can’t afford to do so, then it is a good idea to take a personal loan. There are different types of loans available that fall under the personal loans category. These are the ideal option when you need quick funding for personal reasons. Personal loans have obvious benefits over credit cards. As you don’t need to worry if you will have enough money to make the minimum monthly payment.
4.Be wise with your spending
Cutting down on some expenses that are strictly not necessary can be a great way to save money. Here are some great ideas on how to slash your monthly expenses:
- Use apps that help you earn rewards when you use them to pay your monthly bills.
- Cook at home. You can find hundreds of cheap but nutritious home-cooked meal ideas online and save thousands by choosing not to eat out at every instance.
- Shop at dollar stores
- Cancel unnecessary subscriptions
- Automate bill payments to avoid late fees
- Sell some old junk in your house that might have a good resale value
5. Diversify your income sources
It is after all, a battle of willpower and you can win by either cutting on expenses or increasing your sources of income.
What are some great ways to supplement your salary?
- Selling on Amazon
- Freelance writing
- Digital Marketing
- Virtual Assistant
- Renting out a spare room
- Teaching English online
In short, if you have some spare time then be creative and use your marketable skills to generate some extra dough.
Financial wisdom means planning for longer-term and not getting carried away by temptations. Don’t count on luck to make things happen and take control of your finances in 2020 for a more rewarding life.