So you worry about the state of your personal finance. I do too.
We are not alone as 25% of Americans admit that they worry about money all the time.
Things are not getting easier with the global pandemic currently crumbling various economies.
Despite all this chaos and worry, you are not without hope. You can still do something to improve your personal finance. And that is the meat of this article.
At the end of the article, you would have learned 10 ways you can improve your personal finance.
What is Personal Finance?
Personal Finance is the management of financial resources for an individual or family. It involves saving, budgeting, handlings debts, and investing.
Why is personal finance important?
- To make ends meet
- To effectively manage your income
- To provide a sense of security
- To understand money better
- To avoid asking Aunt Sally for money
Now that those are out of the way let us get right into it.
How to improve your personal finance today
1. Create a budget
Budgets have one simple goal – to help you keep your spending in check. It does not matter whether you earn minimum-wage or a fat 7-figure salary, you need a budget.
Without a budget, you would soon find out that you cannot account for most of your earnings.
You don’t need a fancy app or software to start a budget. You can create one right now with a pen and paper. Go get your materials, I’ll wait.
One the paper, make a list of all your expenses and income – current and expected. In the end, subtract the expenses from income to see whether you have enough money left over.
If you still have way more money than you spend, good for you. If not, it might be time to reassess your spending and cut back endless expenses. No, you do not need another jacket.
I wrote more about how you can create a budget here.
2. Read Finance books and blogs
Before you roll your eyes and say that books don’t work, you should ask whether you have been reading the right books.
Did the book you read promise you that you would make a million before the end of the month? C’mon bruv. What did you expect?
The right financial books would set you well on your way to improving your personal finance. But only when you apply what you read in the books.
Make sure the finance books you read are written by experts and not scammers who are looking to make a quick buck.
Off the top of my head, I would recommend that you read books like The Richest Man in Babylon, Rich Dad Poor Dad, and I Will Teach You To Be Rich.
Finance blogs too can help you improve your finance. They are more transparent as you can follow the bloggers’ process in real-time. Examples of great financial blogs include makingsenseofcents and pennyhoarder.
3. Quit Netflix and Starbucks
Shocker! Yes, you need to quit Netflix and Starbucks.
What I mean here is this; Stop spending money on things that cost you money but don’t add value to your life.
For many people, Netflix and Starbucks run in their veins. They literally cannot do without it. It is their source of joy. These folks don’t have to stop paying for these services as it adds value to their lives.
What about you? Do you need another cup of coffee? Do you need to pay for Netflix when you don’t even watch movies? Are there services you pay for but don’t need?
Check and make adjustments.
4. Cook your meals
I know you love that restaurant just around the corner. The one with the juicy and tender steak smeared with just the right amount of garlic butter. Yes, I can taste it too. Do you know what else I can taste? The fire burning in your bank account.
Having a fancy date, or dinner in a nice restaurant is not bad. Neither is ordering take-out.
But if you are trying to improve your personal finance, you need to learn how to cook your meals. You don’t have to cook in large batches just yet if you are just learning how to cook.
You could cook small meals that fit into a lunch box, to begin with. Over time, you would learn how to cook better, shop for ingredients, and ultimately improve your personal finance.
5. Have an emergency fund
Who would have thought that the Rona would pop its ugly head? Millions have lost their job and many cities around the world are still on lockdown.
Many people have had to dip hands into their emergency funds in these times. Well, there would have been nothing to dip hands into if you didn’t have an emergency fund.
You never can tell when an emergency or unforeseen event will occur. That is why it is common practice to have up to 3 months’ worth of expenses saved up.
This way you would not be left with your pants down when there is an emergency. It would also save you from racking up debts that hurt your finances.
Speaking of debts.
6. Limit debts
I’d rather have an account with zero balance than have one with debts. Debt and I have a terrible relationship. We HATE each other. You should too.
Unfortunately, life is not a bed of roses, and I am not married to Zendaya so sh*t happens.
Sometimes, you just have to buy stuff on credit or borrow money from friends, family, or worse banks.
Since you want to improve the state of your personal finance, here is what you should do about debts – pay them off as soon as possible.
Make an exhaustive list of all the debts that you owe and put a timeline beside them as to when you would pay the debts back.
Work your ass off to pay back those debts, and try not to incur more.
7. Lock away your credit cards
Credit cards make you feel like you can buy anything in the world with just a single swipe. It’s deceiving and that is why Americans racked up more than $1 trillion in credit card debts in 2017 (It is surely higher now).
So what should you do about your credit card? If you want to improve your personal finance, get rid of your credit cards, or at least put them somewhere you cannot easily reach (Your back pocket would not work).
Doing this would limit your impulse buying and in a way improve your finances.
8. Start a Savings Challenge
I would have said you should save all by yourself, but where is the fun in that? Find others like you who want to improve their finance.
This community of “saving buddies” would give you the strength to enthusiasm to continue saving.
Finance platforms like Cowrywise (For Nigerians) have an option that allows you to start or join a savings challenge.
9. Evaluate your lifestyle choices
Why do you want that new iPhone? Is it because John and Jane have one too?
To improve your finances, you need to evaluate why you are spending money in the first place.
Of course, you need to cater to your basic needs like food, clothing, and shelter.
But outside of those things, are you making financial lifestyle choices based on the activities of your peers? Unless they have the same goals as you, it would be unwise to do as they do.
10. Plants Seeds
This is not a call for you to become a farmer, rather it is a call for you to invest. Plant seeds. And no, you don’t have to be rich before you can invest.
There are several forms of investment on the internet today. We have Bitcoin, Stocks, Real Estate, and so on. Choose your seed and plant. You never know which one would yield.
You can also choose to invest in yourself. Take courses and read books that allow you to earn better on the market.
Be realistic when investing. You cannot expect a $20 investment to yield $1,000 in one month. They lied to you Kyle (Sorry for calling you Kyle).
In Grand Conclusion
This is by no means an exhaustive list of things to do to improve your personal finance. But these methods work.
Apply the lessons you learn about personal finance in the context of your circumstances (Don’t fire your boss because a book told you to. How are you going to pay the bills now?)
Wish you well on your journey to improve your personal finance.
