Being Smart With Your Money Is Easier Than You Think
Improve your finances and be smart with your money because your financial state affects every other area of your life.
On the one hand, money isn’t everything. On the other hand, life is a grind without enough money.
So, let’s look at 14 simple ways to improve your finances starting today.
Easy Ways To Improve Your Finances
Disclosure: At no cost to you, I may get commissions for purchases made through links in this post.
1. Make An Honest Assessment Of Your Current Money State
Get your financial facts together.
First, calculate your net worth. Net worth is the value of what you own minus what you owe. Many people, like you and me, start with nothing. However, knowing your net worth is essential to improving it.
Next, how much money do you spend, and where do you spend it? If you aren’t sure, that’s okay. We will cover that topic a little later.
To sum up, get familiar with your current financial situation.
2. Read A Personal Finance Or Investing Book
Start building your finance knowledge base. Learning about money, personal finance, and investing is a great idea.
So, pick a book on a finance topic and set a goal to read it front to back.
Are you looking for an inspiring money book? Then, read Everyday Millionaires by Chris Hogan. It’s full of examples of how people like you and me came from nothing to become millionaires.
Another of my favorite money books is The Minimum Wage Millionaire by Bill Edgar. This book was written for Mr. Edgar’s teenage daughters.
Regardless of your age, Minimum Wage Millionaire is full of great advice. The book is for anyone getting started on their money journey.
Related post – Minimum Wage Millionaire Book Review
3. Put The Right Insurance In Place
Insurance has always seemed complicated to me. Thus, I follow a simple rule: “Insure only what you can’t afford to lose.”
A major accident can cripple your finances, whether that accident is health-related or property-related. As a result, carrying the right insurance in the proper amounts is essential.
That means having enough insurance on big-ticket items, like your health, vehicles, home, and life.
Here’s a checklist of the most important insurance coverages to have:
- Health: For unforeseen health and medical expenses
- Disability: In case an accident leaves you unable to work
- Life: When someone (besides you) is dependent on your income
- Auto: If you own or lease a car
- Home Owners or Renters: Depending on your living situation
Your employer will typically have plans that cover the first three insurance types. So, check with your company first. Then, fill in any gaps as you see fit.
4. Establish An Emergency Fund
Build an emergency cash fund.
As the name implies, the money in your fund should only be used in emergency situations, such as
- Job loss
- Unexpected medical bills
- Car repairs
- Damage to your home
One rule of thumb is to save 3-6 months of living expenses. Set this money aside in a risk-free high-interest savings account. Then, don’t touch that money unless you have an emergency.
Check this out – Simple Habits of People Who Always Have Money
5. Maintain A Monthly Budget
Create a monthly budget and review it at the end of each month.
Please keep it simple. List what money you have coming in, how much you spend, and where. In other words, track your cash in and cash out.
Break your money spent out into major categories, for example:
- Mortgage
- Utilities
- Groceries
- Car payments
- Gas
- Entertainment
- Travel
Your budget shouldn’t be complicated. While pencil and paper are acceptable, a spreadsheet or free online software is better.
When preparing your budget, expenses should be no more than income. Look for ways to create excess cash where income exceeds expenses as much as possible.
Treat your finances like a business. Every well-run business knows how much money is coming in and where it spends it.
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6. Reduce Expenses To Save Money
I will be the first to tell you that it’s challenging to scrimp and save your way to financial success. Living below your means is critical to improving your finances, but healthy finances require more than saving money.
Regardless, think about your spending on the four big-ticket items listed below. Then, consider how you can reduce your costs and save money. Here are the big-spend categories that will likely pop out of your budget where you can save money.
- Housing
- Transportation
- Food and beverage
- Leisure and travel
Next, plan to reduce your expenses by 5% or even 10%. Most financial experts suggest saving 10% of your earned income. By reducing costs, you can achieve this goal.
7. Reduce, Eliminate, Refinance Debt
Managing your debt wisely is one of the most important financial steps. So, how do you go about it?
The first debt to look at is high-interest debt—specifically, your credit cards.
Interest rates on credit card debt are very high. There is no better use for excess cash than paying your credit card bills as quickly as possible.
Then look to pay down:
- Auto loans
- Student loans
- Mortgage debt
Everyone’s debt situation is different. However, the rule of thumb is easy to remember: Pay off your highest-interest debt first, move on to the next highest, and so on.
8. Monitor Your Credit Score
Monitor your credit score regularly.
A good credit score can mean a difference in getting a mortgage, being able to use a credit card, or getting a job offer from a prospective employer.
So be sure to protect and improve your credit score. By working on all of today’s ways to improve your finances, your credit score should take care of itself.
9. Start A Side Hustle
Look for ways to make extra money.
Walk dogs, drive for Uber, rent a room in your house, do home repairs, or create a product for sale. The list of side hustles is endless these days.
Maybe your side hustle will become a financially profitable business endeavor. Who knows? So, why not give it a shot?
But, one word of caution. Don’t let your side hustle interfere with your main source of income. Your primary job or career should be your priority.
10. Start Saving For Retirement
Your retirement may seem far away, and saving for it may seem like a long-term financial goal. But you shouldn’t think of it that way.
By starting early and investing money wisely over the long run, the amount necessary to save is much less. So, start saving for retirement as soon as possible.
Here’s how…
Most employers sponsor qualified retirement accounts. They are also known as 401(k) or 403(b) plans.
Sign up and start saving, even if it is a small amount. You will be glad you did.
Another way to save for retirement is to open and fund an Individual Retirement Account (IRA). There are two types of IRAs: traditional IRAs and Roth IRAs.
Both types of IRAs have advantages and disadvantages. However, most financial pros recommend a Roth IRA. Either way, you can’t go wrong.
11. Invest In Yourself
The best investment you can make is in yourself. So, figure out what you are good at, then put in the time and effort to excel at that skill.
Take advantage of every training opportunity you have. What options does your employer offer? Either on-the-job training or more formal continuing education is beneficial.
The best thing about learning on the job is that it is free.
Higher education is also an option. But be careful; ensure your courses and degree will provide a return on your investment in your chosen field.
Finally, set at least one goal every year to improve your skills. Over the long run, doing so will increase your income-producing capabilities.
Helpful post – Best investments for beginners
12. Start Investing In Financial Assets
We talked about investing in retirement plans. That should be your priority.
But perhaps you are having success trimming expenses out of your budget and making money with a side hustle, getting raises at work, or earning a nice annual bonus from your employer.
If so, expand upon your investments beyond your retirement accounts.
I recommend opening a brokerage account if you don’t have one and investing in low-cost exchange-traded funds that track the total U.S. or World stock markets.
13. Find A Money Mentor
Find a money mentor because having someone to talk to about your finances is a great way to learn and expand your horizons.
Potential mentors exist everywhere. They do not have to be formal mentoring arrangements. They can be authors, television personalities, close friends, or family. My Dad was my money mentor when I was younger.
So, find someone who has succeeded in making money and financial planning. Ask them questions and see what you can learn.
Most people are happy to discuss their accomplishments and how they went about it.
14. Monitor Your Money
Finally, monitor your money every month to keep an eye on things.
Refresh your budget monthly. Calculate your net worth at least once per year and watch it grow.
Examining the current state of your financial affairs will help you identify new financial goals as you progress through life.
Must read: How To Stay Consistent with Your Financial Plan
How To Improve Your Finances: Wrap-Up
Do you want to be smart with your money? Then, use today’s tips to improve your finances and achieve your money goals.
Here is a summary of today’s 14 tips for improving your finances:
- Assess your current money state
- Read a personal finance book
- Put the right insurance in place
- Establish an emergency fund
- Establish a monthly budget
- Reduce costs to save money
- Reduce, eliminate, and refinance debt
- Monitor your credit score
- Start a side hustle
- Start saving for retirement
- Invest in yourself
- Start investing in financial assets
- Find a money mentor
- Monitor your money
Thanks for reading. Before you go, pin this image so you can return later for motivation and inspiration about your money situation.
Author Bio: Tom Scott founded the consulting and coaching firm Dividends Diversify, LLC. He leverages his expertise and decades of experience in goal setting, relocation assistance, and investing for long-term wealth to help clients reach their full potential.