If you’re living paycheck to paycheck and can’t get ahead, you’re in the company of 78% of workers.
It’s frustrating to constantly feel like you’re playing financial catch-up. The stress of being short on money or not being able to reach your financial goals can make you want to give up.
But taking small financial steps in the right direction gets the ball rolling. Those actions eventually help you gain traction and improve your financial standing.
Instead of ignoring your financial situation or accepting your money problems, put these seven tips into action.
1. Start With a Budget
Taking charge of your financial situation requires a plan. That comes in the form of a budget.
You need to know your exact income, expenses, and spending habits to make better use of your money.
Budgeting apps can help you, but you can also create your own simple budget on paper or using a spreadsheet program.
Start by adding up all the money that comes in each month. That could include wages from your job, child support, interest, and other investments.
Next, write down each individual bill or recurring expense you have. This includes things such as utilities, insurance, car payments, loans, and credit card payments.
Subtract those expenses from your income to see what you have left. This is the amount you can divide up between the rest of your expenses, such as groceries, clothing, and dining out.
Once you have your budget set, you need to follow up and make sure you stick to your spending limits. If you spend twice as much as you allocate for eating out, it’ll throw off the rest of the budget.
Monitoring your spending compared to your budget can help you spot the trouble areas. You might notice you go overboard on clothing every month. Look at those areas to see how you can control your spending better.
You may need to adjust some categories while you figure out your budget. You might spend less in some areas than the amount you allocated, so you can lower those limits while raising others.
2. Set Up Multiple Bank Accounts
Do you use a single account for everything? Having multiple bank accounts can help you better manage your money.
If you have trouble sticking to your budget, consider creating different bank accounts for individual areas of your budget. You might have one for your mortgage and other loans, another for other recurring expenses, and a third for your discretionary spending.
When you pay your bills, you know you’ll have the necessary money in those accounts. Pulling from one account for your discretionary spending gives you a hard limit on those expenses.
If you have all of your money lumped into one account, it’s easier to overspend on extras. You convince yourself that you can splurge on that leather jacket, but you end up using money that should go to the mortgage or your credit card payments. That can cause you to fall behind financially.
3. Create Financial Goals
Why do you want to get your finances under control? Setting specific goals can keep you motivated to handle your money better. You know cutting back on spending or increasing your savings is for something you really want.
Think in terms of short-term and long-term financial goals.
Short-term goals can keep you motivated because you can reach them quickly. They’re also building blocks for your larger goals and can help you gradually improve your finances. This could be things such as building an emergency cash fund, cutting your expenses by a set amount or paying off one credit card.
The long-term goals help you improve your financial standing over time. They’re the bigger goals that keep you going and get you to the place you want to be. Examples include paying off all debt, saving for a house, or reaching a larger number in your savings account.
If you’re not sure where to focus your attention, a financial planner can help. A financial pro can look at your current situation and make recommendations for short-term and long-term financial goals.
4. Pay Off Debt
In the UK, the average debt is £15,385. Deciding whether or not to go into debt is a personal decision, but carrying high levels of debt makes it difficult to get ahead financially. The interest and fees you pay eat up money that could go toward your financial goals.
Plan to pay off your debt as quickly as possible, especially if it’s holding you back financially. Put extra money toward your debt to get rid of it faster.
5. Create a Savings Plan
No matter how financially behind you feel, setting aside money in your savings account is a smart decision. Set up your bank account to transfer money to savings automatically on your paydays. That way you ensure you set aside the money before you spend it on other things.
Include retirement savings in your plan. Starting now helps you build your retirement savings faster, so you’re financially stable when you reach retirement age.
6. Increase Your Income
Having more money in your bank account gives you more financial stability and helps you reach your goals. You can either make more money or cut your spending to increase your usable income.
Asking for a raise at your current job or looking for a new job can help you increase your income. Another option is a temporary part-time job or side gig for extra money. Think of it as a temporary sacrifice of your time to accelerate your financial goals.
7. Change Your Mindset
Many people think of cutting back on spending or saving more as a negative thing. It feels restrictive, so you don’t want to do it.
Flip how you think about financial changes. Focus on what you get from the changes instead of what you’re losing.
When you’re tempted to make an impulse buy, as yourself if the item will get you closer to your financial goals. Having meaningful goals and keeping them in your mind can help you change your thinking.
How to Get Ahead Financially
When you’re struggling with money, it can be difficult to figure out how to get ahead financially. Confronting your situation directly and tackling it a little at a time helps you improve your finances. Visit our archives for more financial information.