7 Things To Do to Improve Your Finances
In January of each year, I choose three words that I want to focus on for the year ahead.
In 2020, the words I chose were Create, New and Rest.
Kind of ironic, if you ask me.
✅ New: Check. This [quarantine, social distancing, life as we know it] is all very, very new.
✅ Rest: Check. We’ve definitely done a lot of resting in the past couple of months.
For the word Create, one of the main things Luke and I have focused on last year into this year is creating financial goals and habits. We recently purchased our home, which was a huge financial goal of ours, and besides the mortgage, we are completely debt free. No student loans, credit card debt, car payments, etc.
But that doesn’t just happen. Here are 7 things we’ve done to improve our finances, and you can do them too.
Disclaimer: We are following Dave Ramsey’s baby steps from the book, The Total Money Makeover, and it is amazing.
7 Things To Do to Improve Your Finances
{ONE} Be familiar with your finances.
In order to establish good habits and improve your finances, you need to know what they are. Instead of avoiding them all together, be familiar with them. Know what’s going in and out of your bank account(s) on a regular basis. It’s not only a good habit to start, but it’ll also help you catch errors (or fraud) faster when you know what should be happening.
{TWO} Find a “cheerleader.”
Improving your finances is no easy feat and it takes time, patience, and determination. It’s important to have someone “in your corner” who can motivate and encourage you to stay on the right track. Whether it’s your partner, a parent, or your best friend, find someone who will hold you accountable no matter what.
{THREE} Start a budget (then keep it).
Sounds obvious, right? Creating a budget is necessary to manage, and improve, your finances. Whether that’s through an excel document or an app, find what works for you. For us, the budget template that’s free in Google sheets works perfectly. We’ve actually used it since we got married! At the beginning of the month, we create spending limits for different categories (e.g., spending money, food/groceries, gas). Throughout the month, any time we purchase something, we make sure to add it to the budget. Between the both of us, we’re probably looking at our bank accounts and the budget sheet every day even if we don’t spend anything, just to make sure we’re on track and making progress toward our goals.
{FOUR} Identify spending trends.
What you’ll start to realize when budgeting is that there are definitely spending trends. For me, I tend to spend my money on coffee or books (no surprise there). But once I identified the trends, it helped me be more conscious about what I was spending so I didn’t go over budget. It doesn’t mean I can’t purchase those things ever again, but now I’m aware and think twice before I spend!
{FIVE} Take a look at automatic payments.
Similarly, take a look at your automatic payments. You may not even realize the money you’re spending. For example, do you need both Apple Music and Spotify subscriptions? What about that free trial of Audible you tried that turned into months of paying for it because you “keep meaning to cancel it?” Even a few dollars here and there adds up!
{SIX} Use your gift cards.
I don’t know who needs to hear this but USE YOUR GIFT CARDS. It’s me. I need to hear this. I’m the worst when it comes to using gift cards. I forget I have them, and then when it comes time to buy something, I use actual money instead of the gift card I’ve been hoarding. So if you relate to this, too, USE YOUR GIFT CARDS.
{SEVEN} Set (and write down) goals.
Last, but not least, set (and write down) your goals. Even if it’s a small goal, write. it. down! This will help you visualize the goal and motivate you to work towards it. Maybe the goal is to stay under budget next month, or to have $10,000 in your emergency fund. No matter how big or small the goal is, you got this!