In any event, having your bases covered with regard to finances is a smart decision. The economy and life at large are unpredictable, so you never know when you may need more support than usual. Here are 5 tips to improve your finances:
Have at Least $10,000 Saved
Before going into detail, I would like to preface with a suggestion: get into the habit of allocating a portion of your monthly income to your savings account. This might sound like an obvious way to improve your personal finances, but there are people out there who still struggle to find the discipline to do it. I have a friend who falls into that category, and his financial situation could be better if he had just consistently saved money and refrained from overspending.
Once the concept of a budget is kept top of mind and put into practice (for those who need the advice), try to think of $10,000 as your safety number. Once you have this amount saved, you are in a much better position to deal with unexpected car repairs, job loss and many other financially demanding life changes. You also have more freedom to treat yourself to something that a paycheque or cash on hand is not able to fully cover.
Knowing that you are safe in this sense will bring peace of mind.
Look for Other Streams of Income
Growing up, I was taught to always have options. This includes but is definitely not limited to income.
Ideally your purpose will eventually produce income for you, however many have not actualized their purpose yet and are instead relying on their day job as their sole income source. One income source is better than nothing at all, but two or more is better than one. More income means more possibilities in terms of lifestyle, security and support for those in your life that may need it. This makes income stream creation so important when trying to improve your finances.
Though there are downsides to it, a major upside to living in the digital era is having abundant access to information for learning purposes. You can use YouTube to learn just about anything, take up online courses to learn skills, or, as mentioned previously, find a way to actualize your purpose in some way to create more income. It is also important to not disregard the value of books as a reference guide here.
If you decide to take the skill education route, try Skillshare. It is a platform dedicated to teaching hard and soft skills that are in demand. With thousands of options available, there will be something for everyone. Get started here.
Grow Your Money
Rather than letting all your money sit in a savings account, accumulating minimal interest, also consider avenues that allow it to compound over time. Investing in assets ensures that your money will grow and serves as a reliable foundation for long-term wealth.
Assets can range from properties to ETFs, but the bottom line is that your net worth will increase over time. I have been consistently putting money into an equity-heavy index fund every month for over two years and have accumulated over $1,500.00 in compound interest as a result. Not only am I pleased with the gains I have made (that would not have been accomplished had I put that money into my savings account), but I feel secure in knowing that I will have an extra set of income to do as I please with when I am older.
For more information on index funds, read my article here.
Build Good Credit Habits
Credit is something that, if understood and taken seriously early on, can have lasting positive effects on the quality of your life.
Firstly, ensuring your debts are paid accordingly on a consistent basis will help you avoid having to pay extra interest, or more money than necessary. It also signals to credit unions that you are financially responsible, which influences your credit score. If your score is within a healthy range, you are more likely to be able to borrow large sums of money from banks for a house or business loan, for instance.
Of course, we all want as much freedom as possible to live well and comfortably. Building good credit habits can make a huge impact on your desired lifestyle quality, which can bring yourself and those in your life more satisfaction.
2 replies on “4 Tips to Improve Your Finances”
You always provide such great value.
Glad to help.