Struggling to stay on top of your finances can be a daunting task, especially if you are living from one paycheck to the next. It is easy to feel isolated and alone when you are facing money problems, but that is far from the truth. Millions of people just like you are dealing with the same financial problems. The good news is, for every challenge, there is some sort of way to overcome it.
Some people may take the simple route and use a title loan to get through the tough times, while others may take on credit card debt or turn to family for help. Regardless of how you navigate the tough times, the key to long-term financial stability is changing your spending habits, making a working budget and creating an emergency fund to insulate yourself from future unexpected expenses.
Take the time to create a budget that includes all of your monthly expenses. Prioritize the necessities first; these would include things like rent, utilities, car payments and food. Once those expenses are deducted from your monthly income, take care of any credit card debt or revolving debt. Once these expenses are covered, have a look at what is left. This is the money you have left for paying yourself, which includes saving for an emergency fund and contributing to a retirement fund or other long-term investments.
After all of the important budget items are addressed, any funds that are left can be used however you please. If you never seem to have any extra money and you feel like you’re stretching your paycheck too thin, consider creating an additional income source or make some changes to your monthly expenses to reduce overhead. You could consider cancelling any subscriptions or memberships, the like the gym or Netflix. Try working out at home or reading a book instead of overextending yourself financially.
It’s hard to make changes to your daily routine when you have grown accustomed to living a certain lifestyle, but sometimes change is good and financially necessary. With that in mind, start slowly with small changes to your spending habits. For example, you could stop buying your morning coffee and make it at home or make your lunch for work instead of eating out. You may lose some social interaction, but it is worth it if it puts some money back in your pocket. These changes may seem insignificant but they will make a big difference over time.
If you need to cut your expenses more significantly, that will entail more self-discipline and creativity. Start by breaking specific habits that are costing you too much money, like overspending online or eating out too much. If you are a smoker or drinker, make the commitment to quit. Beside the money you can save on buying cigarettes, you will also save on doctor visits and health insurance. And the added plus of being a non-smoker, is that you get to live a longer, healthier life by simply cutting out a bad habit.
Try to maximize your savings by investing in stocks or purchasing an investment property. You may even want to consider taking on a second job if you have the extra time on your hands. By doing this, you will have a chance to accelerate your savings, creating a safety net for the future or when times get tough. There is no greater peace of mind than knowing whatever comes your way, you have the financial means to handle it without going into debt.
Paying off any outstanding credit card debt will free up more of your monthly income to devote to savings, as well as keeping your credit score in good standing. The sooner you pay off your revolving debt, the better. If your credit cards have balances that seem insurmountable, make your monthly minimum payments and power pay them off one at a time. You can start with the lowest balance and then work your way up from there.
Once you have successfully paid off the first credit card, move on to the next lowest card balance. Repeat these steps until all of your credit card debt is eliminated. You may have to stick to a strict budget while doing so, but once your debt is paid off, you will have the peace of mind that comes with being debt-free, as well as a better credit score. Another reward for your dedication will all be the extra income at your disposal or in your savings account.
Let’s talk retirement. Unless you have been contributing to a 401k or Roth IRA for a number of years, you are probably not on track to retire comfortably. Social Security is just enough to live on the edge of poverty, causing many older Americans to work well into their 70s and beyond. That is why if you haven’t started saving for your retirement already, it is imperative to start immediately. It is never too early to start investing in your future, and it is also never too late. Take the time to speak with a financial advisor to develop a strategy that works for you and your budget.
These aren’t life hacks as much as they are simple advice to establish a workable budget and set attainable goals in your life. By following these proven financial strategies, you can take control of your money once and for all, and hopefully achieve long-term financial success and stability.