We often want to improve our financial status but have no idea how to achieve or where to even start. Here are some tips to help improve your financial well-being.
Tip 1: Grow your savings
By saving money and increasing your savings accounts, you are increasing your personal net worth. By having a larger amount of money saved also, depending on how much has been saved, gives you some financial freedom needed to achieve your goals.
Contribute as much as you are able to towards longer term investments. Regular contributions can also be made into a savings account which pay interest.
Set a saving and investing goal for the current year and aim to achieve it by the end of the year. Review what you were able to save over the previous year. This will give you an indication of what you can aim to save over the current year. You may want to increase this amount by a realistic percentage, for example, 10% more than what you were able to save the previous year.
Tip 2: Keep track of your spending
The easiest way to keep track of your spending is to link all of your expenses, credit card and bank accounts into one account. After tracking your spending in the same account for a few months you will have all the history you need to establish how much you are spending and on what.
Keeping track of spending makes it possible to plan correct financial goals. For example, in order to plan for financial independence, you need to know what you spend on items that you will need in order to create the lifestyle you want.
It’s important to keep track of your spending, in order to reduce spend on items that are not a priority (those that do not line up with financial goals) or to identify where money could be saved.
Analyse bank account and credit statements, classify expenses as great, good, or bad value. Do away with those expenses that do not fall into either the great or good value categories and review those that are in the good category.
Tip 3: Setup automated investments
Investing can be set up as an automated debit order on your bank account. This ensures that investments are not optional but applied every month like any other necessity or expense deducted off your account.
Tip 4: Write down financial goals and plan how these will be achieved
Write down each goal including the amount and by which date you wish to achieve the goal. How much do you need to save or invest each month to achieve these goals? It may also be worth reflecting on why you are trying to achieve these goals as it could provide the extra motivation required to meet you objectives.
By following these guidelines, you will be able to improve your financial well-being.