Six Simple Things you can Do Today To Improve Your Financial Health

Everybody wants to find a quick and easy way to become wealthy or get their finances in order.  Unfortunately, there is no effective way to make this happen short of winning the lottery. Even if that happens, without a good foundation to lay your money upon, it will be gone before you even realize it.  Financial intelligence is about building wealth slowly with smart habits and processes.

Building healthy habits takes work.  Maintaining healthy habits is simple, and gets even easier with time and practice.  If you are looking to improve your overall financial situation, here are six things you can do TODAY to begin these healthy habits.

Plug the Holes (Big and Small)

Eliminate those things in your life that are draining you.  Some you may not even realize.  Cut down on the coffee, stop smoking, eat out less.  All of those frugal tips that are littering your subconscious really add up.  All of the money that most people deem “inconsequential” when spent could easily be put to better use.

Rid Yourself of Debt

In my opinion, this is the #1 important habit to have.  Once you feel the first success of paying off a certain debt, you will be addicted.  You will yearn for that feeling again and again.  If you are using the right methods, debt repayment will come faster and faster. Before you know it, you will be debt free, with much more money than you had when you were swimming in debt.  (Even if your salary has not changed).

Budget

Is it easy? No. Is it frustrating? Yes.  Will you be glad you set it up when it begins to work? Absolutely.  Budgeting is not fun.  Budgeting is not a lot of things.  One thing is definitely has is immense benefit.  If you have troubles establishing your own budget, try Mint or Wesabe.  Both of these sites have easy to use (and more importantly) FREE budgeting tools.  If neither improves your budgeting skills, try You Need a Budget.  It is a service you have to pay for, but it is inexpensive and extremely effective.  I have read that the YNAB Pro is far superior to the normal version.  Regardless of what tools you use for budgeting, it is an evil necessity.  A proper effort is required before trashing the concept of budgeting.  In other words, don’t knock it til’ you’ve tried it.

Set up/Improve Retirement Accounts

If you do not have a 401k or Ira, start one today.  Most are simple to set up and require little in the way of deposit.  I recommend having both.  When I get old, I need to be self-sufficient.  That means I will need money so that my children do not have to take care of me.  I do not believe social security will be there to help when I reach retirement age, so I put the responsibility on myself.

My employer matches what I contribute to my 401k (up to 5% of my income).  I contribute 10% (for now).  This is FREE MONEY, therefore anyone who does not take advantage of an available 401k is a fool.

If you have questions about IRA’s check out IRA’S Explained from March 19.  That should clear up some questions and misconceptions you may have about these types of accounts.  If you have specific questions about IRA’s and 401k’s, Contact Me and I will be more than happy to answer any questions for you, or at the very least, get you to the people who can.

Evaluate your Savings & Set New Savings Goals

If you have some of these habits well in hand, take a look at your savings and goals for those savings.  It may be time for reevaluation.

Automate Everything you Can

You may be like me and not be at the point when you can pay all of your bills through bill pay.  That does not mean automation will not be beneficial.  Start with direct deposit.  Fund your savings and retirement accounts first.  Slowly add automatic transfers and bill pay accordingly until all of your finances are automated.  Hopefully, within about 1 year, I will be free of credit card debt, and I will be able to comfortably automate the remainder of my finances, leaving a worry-free setup.

Get More Money

This can be done in many different ways.  You can start a business.  You can negotiate a raise at your current position.  You can find an entirely new position.  You can freelance using skills you already have.  You can de-clutter your house and sell unused and unwanted items.  As long as you have the time and energy to spare, earning more (even if it is not a lot) is easy.

Tagged as: 401k, account, credit cards, debt, employment, goals, income, making money, Retirement, Savings