Posted on Wednesday 04 December 2019
We all want to get better at managing our finances—but if you don’t know where to begin, financial health can be a goal that feels way out of reach.
Luckily, there are plenty of tried and true rules out there that can work for you. Even better, you don’t have to be a financial genius to understand how they work and to start putting them into practice.
If you feel like your financial health could use a boost but don’t know where to begin, this list is for you. We’ve compiled the top 10 lessons that we’ve learned in 2019 about how to improve your financial health, one step at a time. Keep this list handy— 2020 could be your year to conquer the financial beast and start using smart financial habits!
Without a doubt, the hardest part about making a change is simply getting started. The best way to set yourself up for financial success is to understand where your financial health is right now, in this moment. Getting a picture of your financial health could include:
This will give you the ability to see a holistic view of your finances, and will identify the problem spots or areas where you need the most work. It’s the hardest part, but rest assured, it’s the part that pays off the most—it’s only the beginning.
When you set goals, it’s important to make them as specific as possible. Try to imagine all of the smaller steps that will bring you to better financial health. This is incredibly helpful for goals that are more long-term, since they can easily feel unattainable and out of reach.
Break a big goal (like saving up enough money for a downpayment on a house) into smaller ones. These smaller goals could be putting aside $50 each month into a savings account, or saving all of your spare change in a jar. We can all agree that both of those feel much less intimidating than saying, “I have to save $5,000 by next year.”
Even if your progress is slow at first, that’s OK. Any progress, no matter how fast or how slow, is worthwhile when it comes to achieving financial goals! Now you are on your way to living like the rich.
How often do you tell yourself that you’ll make a lifestyle change and never follow through? We’ve all made New Year resolutions that we throw to the wayside—and whether it’s your resolution to hit the gym every day or a pledge to adopt better financial habits, holding yourself accountable is key.
Start refocusing your thought process towards financial health and you’ll find that you have a much greater chance at success. Holding yourself accountable can look vastly different from one person to the next, but here are a few of the most common approaches:
Start writing down your financial goals in a notebook, a journal, your daily planner, or on a notecard. Keep them somewhere that you are going to see them often.
If you choose to use a notecard, you could even tape it to your refrigerator door (so you can even be thinking about finances when those midnight cravings hit). Find a place that you are going to see them often enough that you have no choice but to keep your finances top of mind.
Talk about your financial goals with your significant other, your best friend, your parents, siblings—anyone in your life that can motivate you. Establishing good financial habits isn’t easy (especially when you are trying to pay down debt) and there will be tough times.
When you get frustrated, sometimes all it takes is a few words of encouragement—or a friendly reminder that no, you don’t need to splurge on that afternoon of retail therapy (you’ve got some big financial goals, after all!).
If we’ve heard it once, we’ve heard it a thousand times: good financial habits start with budgeting. And yes, the thought of creating a budget can be a scary one, especially if you aren’t used to micromanaging your money.
But putting together a budget can be an incredibly rewarding experience—not only do you give yourself the opportunity to fully understand your financial situation, but you are simultaneously giving yourself the ability to act and do something about it. Here are a few examples of what a good budgeting system can help you do:
With great power comes great responsibility—but luckily, there are plenty of easy ways to lighten the budgeting load (keep reading for more!).
Budgeting apps are great tools to keep your entire financial overview at your fingertips (and best of all, with minimal effort from you).
Budgeting apps let you create parameters for all of the spending categories in your life, like Shopping, Groceries, Entertainment, Restaurants and more. Once you create your categories, you can then set mini goals for yourself to only spend a certain amount of money in each category.
It’s a great way to make budgeting and staying on track into an automated process. With syncing to your bank account and automatic notifications when you’re getting close to your spending threshold, budgeting apps are a money management dream for anyone who wants a low-maintenance solution.
The 50/20/30 rule is one of the most often recommended budgeting plans, and for good reason: it’s incredibly simple and straightforward. And literally anyone can dive in and start using it to improve their financial health. The simple overview is this:
Using the 50/20/30 rule can be a great way to instill a little bit of structure into your spending and saving habits without feeling overbearing or restrictive. If you need to start somewhere but don’t know where to begin, this budgeting rule is the one for you.
When it comes to learning how to manage your financial health, you can’t avoid your credit score forever. In fact, if your credit score is lower than you want it to be, improving your score is a great way to start adopting better money habits!
Your credit score is what lenders use to see how reliable you are as a borrower—so it will have a significant impact your present and future financial flexibility. This means you’ll need your credit score to sign up for credit cards, get approved for a loan, buy a new car, purchase a home and maybe even rent a new apartment.
If you’ve been avoiding your credit score, now is the time to face it head-on and start making changes: make your payments on time, settle any outstanding bills and start chipping away at those credit cards!
Having multiple debts can be intimidating. Not only do you have to make separate payments each month, but you’re also paying interest on each separate debt—and those interest rates can be sky high if you aren’t careful.
Consolidating and refinancing your debt can be a useful trick to simplify your payments and save money on interest, boosting your long-term financial health in the process. If you have multiple student loans or personal loans, consolidating is a no-brainer. For smaller debts (like credit cards or unpaid bills), you might consider getting a payday loan to help promote quicker payments and less time spent paying interest.
No matter what your finances look like today, the best way to set yourself up for success is by making good financial habits simple, straightforward, and as effortless as possible.
If you’re having trouble saving, make the process automated by signing up for automatic transfers into your savings account through your bank. You could also consider signing up for an app like Acorns, that takes the spare change from your purchases and sends them into a savings/investment account.
Find a way to take yourself out of the equation so that you don’t need to remember to save (or even think about it). Start with small amounts at first, so that you can get used to the process, and then gradually increase as you go along.
Investments are all about passive income, meaning finding opportunities to make money with limited effort on your part. It’s the best way to ensure that your money is working hard for you at all times—even in your sleep.
Creating an investment portfolio will allow you to start putting money away for your future, like funding your child’s college education or your retirement (unless you plan on working forever - which sounds exhausting). There are many different ways that you can do this, including registering on an employer pension plan, starting an RRSP account, investing in bonds, ETFs and more.
Choose the solution that works best for you and your financial situation. Even if you can only put away small amounts each month, remember that investing is a long-term game: every little bit counts.
Getting your finances in order takes a little bit of courage and determination—but being ready to make a change is the biggest step of all. For help in consolidating loans, paying overdue bills, or for a short-term emergency fund, My Canada Payday offers dependable and reliable payday loans. We are proud to be one of the best lenders in Canada, and we love helping borrowers get back on their financial feet! Give us a call at any time (604-630-4783) or shoot us an email (firstname.lastname@example.org) to speak with our industry-leading customer support team.
Check out some more top 10 financial tips articles: