How to Start Racking Up Small Financial Wins
Many people feel like they’re in a game of catch up when it comes to finances. Especially when you’re just starting to get your feet under you, making good financial decisions is incredibly impactful but hard to achieve. If you are looking for ways to get stable in your finances and start truly progressing, these methods will help you along your way.
Start a Minimum Emergency Fund
Just when things are looking up, there are always crises that can drag your finances down. If you have no way of protecting yourself, the fallout is even bigger, while starting a minimum emergency fund will minimize the effects. Though there is no certain number for these savings because of how relative people’s circumstances and lifestyles are, The Balance recommends saving up the equivalent of 3 to 6 months’ worth of expenses. The second rule is to not touch it except for a legitimate emergency, except to increase the amount as your situation changes.
Get Your Debt Under Control
Inevitably thanks to investments like property, vehicles, schooling, and businesses, people can rack up a good amount of debt. If you are looking to improve your finances in this area, there are a lot of methods to help reduce debt quicker than just paying the monthly bills. According to Power Finance Texas, the debt avalanche is when you prioritize your highest interest rate debts, paying more off from them each month than needed first in order to save time and interest. The debt snowball method, where you pay off debt according to the smallest balance you have, works to motivate you in the opposite way, as you clear your bills much quicker.
Cut Your Monthly Expenses
Over time, the amount of monthly bills you pay will rack up higher and higher without you being aware of it. Suddenly, the money just seems to disappear before you can do anything else with it that month! Outside of fixed expenses, Tally suggests looking into the variable costs that can be lowered or cut out, such as insurance type or entertainment subscriptions. Lots of little things add up, so make sure to check all avenues that you pay bills from to get rid of all the excess.
The financial situation of a person can change drastically from one moment to the next. If you want control over your finances, you need to make proactive choices about them. There are a lot of little things that can have a huge impact!
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