With the new year coming close, many people are setting goals – and this includes improving financial habits and investing for a better future. For many people, paying down their debt and saving more is at the top of their list.
It is never too late to start improving your finances, no matter the time of year. You can pay down your debt while saving money at the same time. You will need to have to be committed, have a clear plan of action, and a positive outlook.
1. Getting organized and calculating a budget
Start by getting any financial statements you have. The next step is calculating your monthly income and recording your income sources. Spreadsheets are great for doing this because it helps when it comes to organizing and calculating your budget. You will then have a list of all your monthly expenses, and this includes loans and any debts you have. Once you are done with this, start categorizing the expenses – rent payment or mortgage to your groceries. You can also try some budgeting tools like QuickBooks Desktop Hosting through which you can remotely monitor your budget and expenses using Windows Virtual Desktop.
Determine fixed expenses (look for expenses that are fixed every month like rent, car payment, and insurance) and variable expenses (these are expenses that fluctuate, such as groceries, entertainment, and discretionary spending). Sum up all your expenses then compare that with how much income you have every month. If your expenses happen to be more than your income, then look for expenses under the variable category and scale back on them. This can mean eating out less or canceling some streaming services. If you have a financial emergency you may need an alternative way of getting some cash, find a cash advance with Loanza.
2. Using fixed amounts when budgeting, repaying debt, and accruing savings
You should try paying more than your monthly minimum on your credit cards. If your minimum payment on a credit card is £50, commit to £100 a month. Do this every month. When you keep doing it, you will start covering the interest and paying your total balance little by little.
Paying down debt is important, but paying yourself is important too. It doesn’t even have to be much, £50 is a good place to get started. Figure an amount to be deducted from your paycheck and transferred to your savings account every month – the best option is savings account with interest. This should be non-negotiable. A great option is setting up an automatic transfer so that the money automatically goes to your savings account without a second thought. By the end of the year, you will be surprised at how much you end up with as savings.
3. Always keep in mind that the budget you create is for you and you are in control
Take it one day at a time and have a positive mindset. You should view budgeting as a healthy choice and not a punishment for poor financial habits. As your savings grow and your debt shrinks, you will start seeing the fruits of your efforts. Your results will be rewarding and every progress you make is going to motivate you even more. By working on your relationship with money, you get the chance of designing a better financial future.