Money

10 Steps to Better Finances and More Savings

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If only you could find a way to whip your finances into shape and still have fun! Well, the good news is, you can. Following a few simple steps will help you discover the secrets to money success.

1. Start paying attention. Many Americans go long periods ignoring their money situation, potentially spending more than they earn and racking up debt. Knowing where your money is will put you in control.

2. Stop thinking you have to know it all. You don’t need the skills of a financial expert to work out what’s best for you. Taking baby steps can make a huge difference. 

3. Write down your goals. Having goals helps you get into the right mindset. It’s like deciding to ditch junk food to reach your health goals. Stop overspending on things you don’t need to reach your financial wellbeing goals. 

4. Get to know your spending habits. It’s easy to overspend if you’re not paying attention, particularly if you’re tap-and-going all over town. An easy way to open your eyes to your spending is to withdraw an amount that you think will cover your day-to-day expenses, such as takeaway coffees, lunches, and trips to Priceline, for a week. Reach into your wallet for the cash each time you spend and watch it disappear.

5. Start a budget. Developing a simple budget allows you to pinpoint your financial goals while rethinking your spending habits. It also means you can allocate a percentage of your income to life’s little pleasures, without feeling guilty. 

6. Shave your outgoings. Shop around to get a better deal on utilities such as energy, gas, internet, and mobile. Then take a closer look at your subscriptions – do you really need cable, Netflix, and Hulu? Gym memberships are another potential source of money down the drain. Cancel them if you’re not using them!

7. Break down your debt. The big picture can be overwhelming, so reframe your commitments into bite-size milestones. For instance, break down that $5000 debt into weekly repayments. “Rather than waiting to see how much you have left at the end of the month to pay towards your debt, it can be more useful to set a budget that incorporates repayments towards your debt,” says Kate Crous, General Manager Everyday Banking at CommBank.

8. Pay down your highest-interest debt first. “Mathematically speaking, the debt with the highest interest rate will be your most expensive debt. By focusing on paying down this debt first, you will reduce the total amount of interest you pay over the long run,” says Crous.

9. Start saving. Experts recommend putting at least 20 percent of your income into a savings account. You might need it for a rainy day or a big unexpected expense but it’s also money for your future. If 20 percent seems a big ask, start with 15 percent and aim to increase by 5 percent as soon as you can.

10. Make friends with your retirement fund. Consolidate your retirement accounts if you have more than one and save on administration and management costs. 

This article originally appeared on our sister site, Now to Love.

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