After talking to a number of people about personal finances I realized that the thing people are really looking for are practical steps they can take to improve their finances.
This entire blog is focused on improving your finances. While we do spend a significant amount of time talking about specific things such as side hustles, blogging, careers, and saving money, today I want to talk about some simple and practical things that people can do to improve their finances.
1) Set up automatic contributions to a retirement account
I know many people who are in their 20s who do not have a retirement account. If they do have a retirement account set up through an employer, they are not having money taken out of their paychecks and put into their retirement accounts.
This is an alarming trend. Setting up automatic contributions to your retirement account is an easy thing to put off, but it can have huge implications down the road. The best time to start contributing is when you are young because those dollars have the longest time to compound year-over-year, versus contributing later in life when there is a shorter time for that money to grow.
If you don’t already have automatic contributions being made to a retirement account, now’s the time to get started.
2) Track your income and spending
I’ll be the first to admit that tracking your income and spending can be time-consuming. It’s not a fun thing to do, especially if you have a variety of credit and check cards.
If you don’t track your spending, though, there is no way to tell if you are over-spending in any given category. You might think you are only spending $200 a month on restaurants and take-out, but in reality you are spending double that. These are things that can be identified – and corrected – if you track your spending.
3) Find ways to cut expenses
Finding ways to cut expenses is a practical action that can be taken to improve your finances. If you track your spending, as I suggested, it’s easier to identify categories and areas that you are spending more than you should be.
Some practical ways to cut out spending is getting rid of subscriptions that are not used (Spotify, Netflix, magazines, cable, gym memberships, etc.), learning how to coupon (here’s a guide for beginners), or using an HSA for qualified health expenses.
4) Set up automatic contributions to a savings account
Retirement accounts aren’t the only accounts that you should be making automatic contributions to. Having money regularly transferred from your checking account to a savings account, or having money regularly taken out of your paycheck and put into a savings account is another practical way to improve your finances.
Having an emergency fund is essential in case of unexpected job loss, car repairs, house problems, medical expenses, and more. If you automatically set up contributions to your savings account you will have money available for a rainy day.
5) Evaluate your Income
The last tip I have for practically improving your finances is to evaluate your income. Assuming you have a full-time job, there are a number of things you should be thinking about. Are you getting paid the same as a comparable employee at another company (check Glassdoor for this information)? Are you qualified for a higher-paying job? Would learning a new skill allow you to get a higher-paying job?
Doing an analysis on your income should be done at least annually. With the wealth of salary data available online these days there is no reason to be paid less than your peers.
If you are already making as much as you can at your full-time job, it’s time to think outside the box. Would starting a side hustle (i.e. making money outside of your full-time job) help you reach your financial goals faster? I make money through side hustles and it’s greatly benefited my wife and I as we pay down student debt and work towards financial goals.
If you want to join me in the blogosphere, check out my post 5 ways to make money blogging. Blogging isn’t the only way to make side income – nor is it the easiest – but it’s definitely an ideal way to make money on top of your full-time job.
These are just 5 ways to improve your finances. If you are looking for more ways, check out my series on ways to improve your finances in the new year: part 1, part 2, and part 3.
What practical things have you done to improve your finances?
Photo by Betsssssy