If you are in a tight spot, you could be looking for ways to improve your finances now so you can make your situation better. However, there is a chance that your problems took a while to manifest because of years of neglect. It is uncommon that what you are going through at present is because of what you did the day before.
You could have been using your credit cards as if it was an extension of your monthly salary in the past years. At times, you could be using more than what you can pay for at the end of the month. It is also possible that you took on post-graduate studies for years even if you cannot afford the student loans that came with it.
There are ways to help you improve your finances now but understand that if it took you years to dig yourself in a hole, it will also take time to climb out of it. Unless you get some windfall money from an inheritance or in winning the lottery, you will need some time to pay off your debts. Sometimes, even longer than the amount of time, it took for you to get into debt.
However, this does not mean that you cannot do something about your situation now. The sooner you work on solving your financial problems, the faster it would be for you to get everything in order. This gives you the opportunity to reach your goals in life as well. If you are serious about this, here are three questions you need to start asking yourself.
Where are you now?
To help you improve your finances now, it is important that you have an idea where you are at present. You need to audit your current finances to have a clear understanding of where you stan. One of the best financial tools for the job is your household budget. This can tell you the amount of money coming in and all your expenses in any given month.
This is if you have a comprehensive household budget. You need to work on your budget to make sure the data you have are accurate. It would be a lot simpler if you only have one source of income. However, Marketwatch shares that almost ⅓ of Americans need a side gig to pay their bills. You need to account for all sources of income to help you plan better.
Your budget should also show you the expenses you have every month. This is a lot tougher because it needs to be as detailed as possible. It should have not only the amount and the lender but even payment due date as well as interest rate. This area should cover recurring bills at home all the way to big-ticket item payments.
Where do you want to be?
If you want to improve your finances now, you need to have a clear picture of where you want to be. After you have spent time figuring out where you are with your finances, you now need to know what you want to achieve with your finances. This is your target that you will work on for the succeeding months or years.
The most common goal is trying to be debt-free as you are riddled with multiple payment obligations. It can be a mix of credit card debt, student loan payments, car loans, and even your mortgage obligation. These are on top of your recurring household expenses such as paying for utilities and even food and other living expenses at home.
You can also be trying to save for a downpayment for a house for your family or even looking to set up a business of your own. These goals are where you want to be in a few year’s time. It can even be retiring early and being able to do the things you love. You see yourself traveling or visiting various historical sites and learning a lot about other people’s cultures.
How can you get from one point to the other?
Now that you have an idea where you are at present and where you want to be in the future, the next and final question is very important if you want to improve your finances now. Your present situation and where you want to be are two points in your life. Your goal is to connect those two points with a concrete plan.
This is the third and final question – how do you get from one point to the other? You need to plot out your financial plan to help you reach your goal. With careful consideration for your timeline, you need to pattern your finances in order to help you reach your goal. There are a few ways to help you get your finances in order.
Stay on top of your household budget
As mentioned earlier, your household budget plays a crucial role in helping you reach your financial goals. The BLS shares that in 2014, the average household budget was over $66,000. If you are planning to get to where you want to be, you need to make sure that your budget is up to the task. You will need to constantly monitor your income and expenses. Changes in any of them have to be plotted into your budget.
If you start missing small items in your budget, it could soon lead to overlooking crucial financial developments. Once you reach this stage, it will not be surprising to get into serious problems along the way. This will only make it more challenging for you to improve your finances now because you will be too busy fixing budget problems.
Increase the gap between your income and expenses
One of the best ways to help you improve your finances as fast as possible is to look for ways to increase the gap between your income and expenses where your former is on top. The easier to accomplish between the two is looking for ways to help you lower expenses at home. It can be frugal living, taking public transportation, or simply making home-cooked meals more often.
Increasing your income can take a lot more time and effort on your part. However, the rewards are worth it because you get to have more funds to work with. Most people choose to look for a salary increase at work while others take on a side gig to complement their office salary. It is also possible to find out how you can earn from your hobby. This helps you earn money while doing something you already love doing.
Keep your debt obligations at bay
As you make improvements in your finances, it is important that you stay away from impending whatever progress you make. This includes impulsively acquiring new debt obligations as soon as you pay off existing ones. You need to have a plan for how you can get to your goals and not be easily tempted with a clean and paid off credit card balance.
There are a number of ways to help you improve your finances now but it will take commitment and dedication from your part. Understand also that there are no quick fixes but calculated financial steps you can take at present to help put you in the right path.