Many people struggle with money and live paycheck to paycheck. Here are 3 simple ways to improve your personal finances.
Make a Budget
Sit down and create a budget. To do this, simply make two columns of expenses. Column one should contain fixed expenses, those that are the same amount each month such as insurance, rent, and auto loans. In the second column, list all of your variable expenses such as your electricity bill, food, and entertainment. Compare these costs against your monthly income. A proper budget will have a place for all of your money to go into.
Making subtle changes to your variable expenses will provide you with more disposable income. This excess money can be distributed to pay down debt or into an emergency fund account. However, by simply creating a budget, your personal finances can be better managed than if you didn’t.
Reduce Your Debt
The interest you pay on your debt will always be more than the interest you will accrue from any investments. So reduce and pay off your debt as quickly as possible. Credit cards should go first. These typically have the highest rates. Once paid off, only use them if you are able to pay the balance off by the end of the month.
Auto loans can be paid off quickly by putting a little extra money toward the principle each month. Interest rates for auto loans are relatively low, but paying on them over the course of several years will eat up a tremendous amount of money. Lastly, work on your mortgage. A mere additional $100 a month can take years off the life of your loan and will literally save you thousands of dollars in interest.
Increase Your Income
If you can find a way to make some extra money each month, then your personal finances will only get better. An extra $200 a month can make a big difference for anybody. There are several ways to make extra money, the best being to get a part-time job. Lots of employers are looking for somebody who is willing to work a couple of hours a week.
Other methods can be recycling for money, holding a garage sale, or even selling plasma. The key to making this extra money work for you is to not spend it. When you get paid, put your money to work for you instead of creating more debt. Whether your goal is to be debt free, save for retirement, or to simplify your finances, these tips can get you there in no time.