Seven ways to improve your financial wellbeing
We all need money to live, and the more money we have to live on, the more options we have and the more comfortable our life can be.
So how can you make sure you have enough to live on, and reduce your money worries – especially in tough financial times? To help you, we’ve put together seven tips to improve your financial wellbeing.
1) Save money
In tough times, you may be thankful you have savings to fall back on. They can also help you invest in significant purchases in the future. So if you aren’t already saving money every month, try to start.
You don’t need to put away hundreds every month. Even a small amount saved regularly can soon build up over time. To see how much you can afford, make a list of all your essential monthly outgoings and total these. if you haven’t already done so, it’s a good idea to see if you can reduce these by negotiating fees or finding cheaper alternatives.
Then keep a record of your non-essential spending each month. Again, are there ways you can reduce this? Do you need to spend on everything? And if there are some expenses you do want to keep, can you find cheaper alternatives? The more you can cut down, the more you can potentially put away for later.
Now finally, look at your income each month, and subtract your outgoings. What are you left with? Is there enough left over to put into a savings account or invest? You don’t need to put it completely out of your reach if you are worried you may need funds in an emergency.
There are many different types of savings accounts. Some require you to leave money in for a set amount of time, whereas you can access your funds at any time in others. You may opt for a combination of the two, as the former sometimes offers better returns.
Some people choose to invest their money in stocks, crypto, or other assets. For instance, you can convert Bitcoin to Euro, Ethereum to USD, Ripple to USD, etc. If you decide to go down the cryptocurrency route it is important to research first. Some people can make a lot of money by trading cryptocurrency as the market is volatile. But this requires knowledge and an element of risk.
2) Make a budget
We’ve already covered this to a degree in looking at savings. It is important to be fully aware of your finances: what is coming into your household and what is going out. This way you can take control of your spending and know how much you have, and how much you need to provide for.
You can also allocate yourself a monthly spending budget that you can enjoy without guilt, knowing you can afford to spend that money. These are excellent financial habits that will serve you well throughout your life, whatever the state of your finances.
3) Look after your credit score
Every adult has a credit score. This is a way of assessing your creditworthiness and any financial institution will look at this before deciding to lend you money or extend you credit.
The better your credit score, the more access to financial products you will have, and the better interest rates you will be offered (making any loans cheaper). So it is important to be aware of your score and ensure you look after it.
Late payments, bad debt and court judgements can negatively impact your credit score. So can not having a credit card or loan, as without proof you can repay money, it is hard to assess your level of risk.
So make sure you treat your finances responsibly and pay all your bills on time. If you have a poor credit score, you can increase it by building your credit history, make regular payments on time, and not using all the credit available to you.
4) Have multiple income sources
If you are struggling to make ends meet with your job, and you have the extra time and energy, you may want to consider adding new sources of income to help you through a tricky patch or put away a chunk of savings.
You may decide to take on a part-time job, join the gig economy, pick up extra freelance work, or even sell products you make or buy online. There are plenty of creative ways people are making money on the side. Just make sure you steer clear of MLM schemes!
5) Remain debt-free
As a general rule, try not to get into debt. We’re not talking about taking out a mortgage for a property, or buying on a credit card (as long as you pay it off in full each month), but living beyond your means and accruing debt you struggle to pay off.
If you want something big, like a holiday or a car, it is far better, if you can, to save for it in advance than it is to go in debt for it and pay it back over time. When you take out a loan you will always need to pay interest, making whatever it is you are buying more expensive. And never carry debt on a credit card if you can avoid it, as the interest rates on these can be high.
If you are struggling with debt, speak to a debt specialist. Sometimes it can help to consolidate different debts into one monthly payment, and you can even reduce your interest this way with the right help. Please don’t struggle on alone, or ignore debt. There is help out there and there are options.
6) Design a retirement plan
If you haven’t already made any financial provision for you retirement, now is the time to start. Do you have a pension, or other financial provision? Have you thought about when you want to retire and how much you might need to live on?
A good place to start is by investigating the tax rules on pensions where you live. How does your government help or encourage people to save for their retirement? What tax breaks can you take advantage of?
If you can start putting money away every month – even a small amount – now, all the better. Follow our advice on savings and try to start investing a little regularly if you can. And if you are employed, find out what your employer offers in relation to pensions. The earlier you begin, the more you can save for retirement.
7) Learn as much as you can about personal finance
As with many things in life, knowledge is power. You may find finances boring, but acquiring just a little bit of knowledge can make you a lot richer over time, and that is certainly not a boring prospect!
So start listening to expert advice, listening to podcasts by finance professionals, reading finance books, considering helpful videos, or taking online courses to increase your understanding. But beware anyone who promises to make you right quickly, or guarantees any return. And always investigate anything or anyone thoroughly before you part with your money.
Photo by Andre Taissin