Life can be tough when you’re dealing with floundering finances. Living by the breadline can be challenge for the best of us and can be made even worse if hit by an unexpected bill or expense.
To help ensure that they can stay afloat from month to month, many people obtain loans to help them out and subsidize their income; however, this temporary measure only makes the situation even worse in future, as you increase the amount of debt you owe and the size of your monthly repayments. Sometimes, getting out of a financial hole can seem hopeless and grim, but there are ways to take back control of your money and eventually improve your situation. It’s not going to be the easiest task you’ll undertake, although with the right frame of mind and dedication, following these steps can make a real difference and hopefully improve your financial situation.
Break Your Finances into Steps
Improving your finances is all about goals and objectives, so to be effective at taking control you need to first identify what you want to achieve in order to make your life a lot easier. It can be as simple as paying off a debt, a credit card, or it can be as grand as saving a large sum of money to use to buy a car or a house. Regardless of the final aim, you need to put steps in place to help you obtain your goal.
Breaking your finances into easily definable steps can make the task of improving them a lot easier, as they’re now in multiple manageable chunks rather than just one massive task. So, for paying that debt, the first step is to increase your monthly repayments so that it gets payed off faster, and to save a large sum of cash, get a lifetime ISA to make your money go further.
Set Weekly or Monthly Goals
Budgeting and improving your finances takes motivation, and there’s nothing less demotivating than not being able to see the results of your hard work. So, to incentivize yourself, instead of having a single final goal, create monthly or even weekly goals that you can aim to hit. This means that when you do hit them, you’ll feel more accomplished and more motivated to keep going, but perhaps more importantly, it’ll make the challenge of improving your finances a lot easier to achieve and less daunting.
Always make sure that your goals are achievable and aren’t too difficult to hit, with some good options being to save an extra few dollars each week than normal, or keeping your weekly spend below a certain amount. Gamifying your progress can make budgeting less of an ordeal and could potentially make it fun. Budgeting is the fundamental activity regarding your finances, but to be better equipped and to gain more knowledge about it, you can join a postgraduate finance MBA at Victoria University in order to learn about financial management at greater detail.
Have Dry Weeks Instead of Months
A dry month refers to a period of time where you engage less on unnecessary spending so that you’re wasting less in order to allow your budget to improve. This means that for this dry spell you’ll limit the amount you eat out, reduce how much you drink, and minimize the money spent on entertainment.
Reducing these elements and living more modestly is a good way to improve your finances, but doing it for an extended period of time, such as a month, isn’t sustainable at all, as you’ll likely get bored and miserable.
Instead, a good option is to reduce these dry months into dry weeks, as it’ll make it far more manageable and less restrictive. It’s a good idea to do this dry week at least once a month, as it can actually help you save more money as you’re doing it more frequently. The key to success here is to ensure that you don’t splurge and overspend during your normal weeks to compensate for the week off.
Going green isn’t all about helping to improve the environment. Although that is a fundamental reason for doing so, being more energy efficient and conservative can actually also help you save money and therefore improve your budget. This is because putting in measures to reduce your energy usage means that you spend less, which is an easy way to help you save hundreds of dollars a year.
Some of the most doable changes include investing in energy-efficient lightbulbs, as these can last a whole lot longer and use way less electricity; cranking down the thermostat by a single degree; getting into the habit of turning electrical equipment off via the mains; as well as reducing the amount you drive and instead opting for walking and pedal biking to get around.