Are you someone that lies awake thinking about your credit card balance? Do you consider how late payments are affecting your credit score — or why you cannot seem to be saving any money? If you are often dipping into your overdraft, constantly living in the ‘red’ — it’s time to take positive action.

You Can Improve Your Current Financial State

Regardless of your current financial state, you can experience a more stable financial future. In order to become financially independent, however, you must begin living on less than you earn — period. Even if you are in Debt, you must live by this rule.

Just remember, it’s not the amount of money that makes you ‘rich’ — it’s how you manage that money. As you learn to acquire good finance habits and develop more effective money management skills, you too will experience greater financial freedom.

Seven Money-Saving Tips to Improve Your Finances

When you make a plan, you’d be amazed at what you can achieve. As you begin to accomplish small goals, you will gain greater motivation and self-confidence. You can take action today, improving your financial health for years to come.

1. Budget for expenses and saving

You need to sit down and crunch some numbers. Although your situation may be unique, the 50/30/20 rule is often useful. The concept here is that 50% of your income should be spent on the essentials, such as your fixed expenses; 30% should be used to purchase additional desired living expenses and optional extras; followed by 20% to pay off debt and to save.

Top tip: Make a spreadsheet based on your fixed (mortgage payments, utilities, car payments, etc.) and variable expenses (groceries, entertainment, gas, etc.) in relation to your income. This will help you see where you need to cut back so that you can tackle your debt and begin saving.

2. Reevaluate your bills

Although 10 extra dollars here and 15 extra dollars there may not seem like a big deal, it all adds up at the end of the month. Here are a few tips to get you back on-track:

• When it comes to your utility bills, start comparing. If you are already with the best energy provider, then it’s time to become more energy efficient. Begin researching some of the top energy-saving tips, as outlined by the Department of Energy.
• In relation to communications, be aware of where your money goes. Do you exceed your monthly mobile allowance each month? Then perhaps it’s time to switch to a package that makes more sense for your needs. Better yet, bundle your mobile phone, internet, and cable services for instant savings.

3. Effectively target your debt so that you can save

When aiming to save money, it may seem counterintuitive to address your debt — but this is a very important step. If you have debt that’s accumulating interest in the background, what’s the point of saving? Begin with the most expensive debts first, including credit cards and other loans that incur high penalties.

Prioritize, and when the most expensive debt is clear, you’ll already be in the habit of transferring x-amount each month. With your debt gone, those funds can now be transferred into a savings account. However, there isn’t a one size-fits-all strategy, so if you’re struggling to get out of debt and improve your credit score, you may want to consider professional credit services to get back on-track.

4. Learn to minimize

Your budget will quickly show where your money is going. Whether you often shop at department stores or love to shop online, it’s time to cut back. Spending, spending, and spending some more actually distracts us from what’s truly important to us. Get rid of clutter, sell off items you no longer need, and put that money into a savings account. You’ll feel like a major weight has been lifted from your shoulders.

5. Quit spending money you don’t have

Credit cards can be great — they can help you make timely payments and even gain cash back. But if you’re spending frivolously, your debt can quickly spiral out-of-control. Always remember that golden rule, ‘do not spend more money than you earn.’ If you only make $3000 a month, but are spending an average of $5500, you can clearly see where the problem lies. At that rate, you’ll not only go into deeper debt, but you’ll never be able to save a penny.

6. Save a little each month

Even if you make $25,000 a year, it’s still possible for you to save a substantial amount by the time you reach retirement. Equating to just over $2080 a month, if you saved $180 of that each month, after 50 years, you will have an additional $108,000. If you can’t imagine putting away $180 of your monthly income, then you need to revisit your budget and change your personal financial habits. Everyone can save — the difference is, not everyone can save based on their current spending habits.

7. Take advantage of customer reward programs

No matter where you live or where you shop, there are retailers that will reward you. Focus on places where you shop regardless — such as your local grocery store. Do they offer a points program? If you are spending $100 on your family’s groceries, you may as well benefit. In many cases, you’ll be able to use these points to get free groceries. Also, don’t be shy to coupon!

As you make small improvements each day, these will quickly add up, allowing you to develop better financial habits. And remember, having stacks of cash in the bank isn’t freedom — but being in control of what you have certainly is.

Sources

http://www.independent.co.uk/money/spend-save/a-step-by-step-guide-to-cutting-all-your-bills-913125.html

http://www.thesimpledollar.com/little-steps-100-great-tips-for-saving-money-for-those-just-getting-started/

http://uk.businessinsider.com/save-money-pay-debt-2017-6

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