3 Smart Ways to Improve Your Personal Finances

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Credit: cpcc.edu

It doesn’t need to be the start of a new year to make a decision to overhaul your personal finance practices.

When you find yourself in need of revamping financial practices in any day of a given year, do it. This is particularly true if you are in eminent risk of financial ruin.

Here are three ways that can help you improve your personal finances.

1.) Live Within Your Means. Living within your means is probably the simplest step to financial health, and yet with the proliferation of credit cards, it becomes the most neglected. CreditCards.com reported that the current national average APR for new credit cards is at 14.99%. The credit card news agency also reported that U.S. adults carry an average of $4,878 in credit card debt from month to month, excluding zero-balance cards and store cards.

The application of this step is straightforward: If you earn $3,000 a month, do not live like you earn $6,000 a month. Almost all personal finance troubles boil down to spending money that has yet to be earned. Always make provision for unforeseen and planned events.

2.) Commit To Micro-saving. Studies show that the majority of Americans now have fewer savings. According to an Employee Benefit Research Institute study on how Americans spend money, the majority of U.S. citizens — 57 percent — have less than $25,000 in total savings or investments.

If you have never been into the habit of saving, start small. Drastic change in personal finance practices usually does not last. So, if your goal is to make saving a habit, kickoff this resolution by putting aside $1 a day from your daily budget. Once you get used to the practice, you can scale up saving to $2, $5 or $10 every day.

3.) Resolve to Get Out of Debt. The first two resolutions are actually geared to make this third resolution achievable. Start by reviewing your spending, and see for yourself where your income actually went. After this, decide to cut cost on unnecessary expenses. You can also get a copy of your credit report and familiarize yourself with every liability under your name. This is to make sure that you do not have debts that are unknown to you. When you understand your total financial standing, you can plan with a personal finance advisor how to get out of debt in a given time frame. To increase your chances of getting out of debt, you can also take a second job and pay off existing credit cards and auto loans.

These three personal finance resolutions are cornerstones of financial health. They reinforce each other and whenever you practice one of them, it will be easier for you to practice the other two. Additionally, their efficiency is never time bound. When you take them to heart this 2014, you will be in a better financial shape in 2015 and then when you make them one of your values in 2016, you will be financially empowered in years and optimistically, throughout your lifetime.

 

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Photo Credit: cpcc.edu

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