Let’s face it. When we were young, many of us didn’t particularly think of the steps we need to do to improve our finances. We were carefree people bound to make mistakes.
As we grew older, many of us realized one important thing, that is, we realized that we needed to have money goals and make changes so we could be in a better financial situation in the future.
Luckily, a lot of us have money goals in mind. Some would like to increase their net worth fast (i.e., become rich fast) in a few years, some would love to buy a house, and some want something else.
That said, a lot of us also don’t know what necessary financial adjustments should be made or how to make such changes. If you are one of these people, this is your lucky day.
This post will detail some of the small steps that can improve your finances.
10 Small Steps To Take Now to Improve Your Finances
If you are ready to see what these goals are, read on!
1. Create a Budget for Household Members to Follow
One of the best small steps to take as part of your money goals is to create a budget for members of the household to follow.
The truth is, if you want to make positive changes to your finances you always need to start with a budget. Period.
When you detail what income you receive each month and outline your monthly bills, you will know exactly what you need to get by and/ or know what to cut when money gets tight.
This is the ideal way to feel secure knowing that your necessary bills will get paid each month.
In addition, you can see how much money you will have left over once all of the bills are paid and decide how you will spend that money on behalf of the household.
Some of it might go to a night out or dinner at a restaurant while other portions can be set aside as savings in an emergency fund.
2. Get a Side Hustle Gig
If you really want to improve your finances and do so in a continual manner, consider getting a side hustle gig.
If you have free time, you can use that to get a gig or two to make additional money.
Side hustles are small jobs aside from your usual full-time and part-time jobs that can make you extra money online and offline.
You can fill out surveys, become an online tutor, or deliver food in your neighborhood.
These side hustles aren't overly time consuming and will help you to improve finances quickly and easily.
If time permits, you can even grab a few side hustle gigs and make some extra cash to use for bills or put away into a savings account.
- Are you following these 5 personal financial rules
- How To Know When You Need A Financial Planner
- 8 Ways for Millennials to Avoid Credit Card Debt
3. Pay at Least the Minimum Payments on Your Debts
Another step to take is to pay the minimum payments on your debts and monthly bills.
When you pay the minimum payment, you know that you won't get charged a late fee or charged for underpaying the monthly bill.
It's better if you pay more than the monthly payments so you can pay off your debt fast. That said, if you are tight on money, be sure to pay at least the minimum each month.
Keep in mind that interest rates will often be a factor and the more you pay on your monthly bills the less time you will have for your interest to accrue.
4. Put Away a Small Amount Each Month Towards Savings
After you have outlined your budget and know how much you have to pay each month on bills, you'll know what you have left over as extra funds.
Take a small amount of that extra money and put it away for savings purposes. Better yet, before you pay your bills, save money first, and figure out what bills are to be paid using the leftover money.
When you put money in a savings account, you can rest easy knowing that you will have cash on hand should you need access to the funds in the case of an emergency.
The exact amount of money which you put away will depend on how much extra cash you have to spend.
Some people choose to put a large majority of the extra funds in savings while others find that putting half of the amount or a little bit less than that is ideal.
You'll know what you're able to set aside and how much you will need for other expenses.
5. Check Your Credit Score Periodically
Another way to take small steps to improve your finances and get you closer to your money goals is to check your credit score periodically.
You need to check if all the credit information is accurate. Report the inaccurate information as this may or will affect you negatively. You don’t want any incorrect information in your file as it may cause you a loan. Worse, you may be liable to pay the debt, loan, etc. even when it is not yours to begin with.
Your credit score provides companies and creditors with insight as to your overall financial wellbeing and dependability, which can also help the credit lenders determine if they should extend credit to you or not.
It is compiled as a result of a variety of factors such as current debt, accounts opened, borrowing activity, and more.
Since this is what can prevent you from getting a loan or, in the alternative, help you to do so, you should always know the current status of your credit score.
6. Review Your Credit Reports Occasionally
In keeping with the importance of your credit score, you should occasionally review your credit reports, too.
These are detailed reports relating to your closed and open accounts and whether the history of these items was favorable or not.
Credit reports are the best way to review your credit history and see if you are in good financial standing.
It's a way to keep an eye on your borrowing and credit history and determine if you are currently in a beneficial financial position.
8. Save for College
If you have kids, you should think about saving for college as part of your money goals.
You may not know at the moment if your children will be attending college, but in case they do, put money aside in a separate account to prepare for higher education in the future.
The cost of higher education is expensive and it gets more and more costly as the years progress.
A little bit of money put aside each week or each month will add up in time and you'll be thankful in the future that you took the time to do so.
9. Make Bill Payments Automatic
You can also take a money-saving step to improve your finances by making your monthly bill payments automatic.
By doing so, you are eliminating the risk of forgetting to make your monthly payment and know that the money will be taken out of your account on the same day each month.
This will ensure that your bills get paid and get paid on time.
Plus, it's really easy to set up automatic payments.
Once you do the initial setup, the payments will come out of your account each and every month.
You can sit back, relax, and not worry about paying the bills, as it will be done for you automatically.
10. Open an IRA
An IRA is a retirement savings plan which will help you to save money for your retirement years from now.
You want to be sure that you're financially sound when the time comes to retire and opening an IRA and contributing to it will enable you to do so.
This provides a secure and successful way to save for the time when you decide to retire.
Having an IRA in place early on will help you to feel secure for your retirement years.
While a lot of people don’t think that a small step here and there won’t make any dent on your current financial situation, believe me when I say that even small tweaks in how you manage your finances can make a big difference.
Start with a small step and you’ll be more than happy down the road that you make such stride.
Which of these tips have you done? Do you believe that small steps can make a big difference in your finances?
“Allan Liwanag is the blogger behind The Practical Saver. An analyst by day and dedicated blogger by night, he loves to share his thoughts – based on his research, personal knowledge, and experience – on topics related to family, life, and money.”