How to Improve Your Finances

How to Improve Your Finances

If there’s one thing almost everyone would like to improve, it’s their finances. Financial freedom is on par with good health and a happier lifestyle, and it might even be a gateway to finding living a happier and healthier lifestyle. Imagine living a life that’s debt-free and filled with abundance. While money doesn’t buy happiness, it certainly does pay the bills and allow you to live without as much stress as someone who lives paycheck to paycheck or owes money to creditors. Thinking about changing your financial situation is probably something you have on your mind regularly, but thinking doesn’t fix your financial problems. Action fixes your finances.

Change Your Lifestyle: The first thing you must do to fix your finances is change your life. Stop eating out, spending money on coffee, buying new clothes, and traveling if you have any debt. That debt must be paid off. For example, let’s say you owe $15,000 in credit card debt. It’s only more expensive if you don’t pay it off thanks to the high-interest rates you’re undoubtedly paying. If you make $100,000 per year and you’re living with debt like this, it’s time to change your life. You could spend $1,500 per month on paying off your debts for one year rather than going to movies or eating your meals at restaurants.

Not only will this new habit of a spend-less lifestyle become a habit before a month is over, you’ll spend one year living a frugal lifestyle so that a year from now you’ll live one that’s financially free. Doesn’t that sound like an easy change? The time passes no matter how you choose to spend it, but knowing you can be debt-free in one year eliminates stress and anxiety.

Pay Yourself First: Once your debts are paid off and you rework your budget, it’s time to learn the art of paying yourself first. You are your most important investment. Your budget must have a category called “ME” in which you apply your savings prior to anything else. You must always save prior to spending rather than saving what’s left over at the end of the month.

Negotiate Expenses: It goes without saying you need a budget whether you live paycheck to paycheck or you have ample money left over after your bills are paid. Once you know what’s coming in and what’s going out and where it’s going, figure out how you can lower those bills. Can you refinance your mortgage for a lower rate? Don’t take out additional money from the equity of your home or make your loan process longer, simply get the lower rate and pay off your home faster.

Can you lower your cell phone bill or your cable bill? Can you ask your insurance company for discounts or shop around for better rates? These things might not save you a bundle every month, but you can probably save $100 or more if you negotiate. That money can go into your savings account, and you can invest it wisely and watch it grow.

Saving your money, fixing your finances, and living a life that’s financially free should be your number one goal in life. Once you get to this point, you begin to notice the trickle-down effect it has on your life. You’re less stressed, you have more fun in life, and you’re not worried all the time. It’s time to stop thinking about your financially-free life and act on it.

Mark Angelo co-founded the Investment Manager in August 2009 and two affiliated investment managers in 2000 and 2016.