We all wish our finances were better. Even when we feel like things are going well, there is usually something else that can be done to improve the financial situation. As you look forward to the rest of the year, here are a few tips that can help you improve your finances:
1. Figure Out What You Want
One of the biggest reasons that we overspend, or buy things we don’t need (or even want), is that we haven’t really thought about what matters to us. Instead of spending mindlessly, give some thought to what you want from your money.
Look at your values and priorities and try to determine what matters the most to you. Once you figure out what you want, you can start bringing your spending in line with your priorities. You might be surprised at how much more satisfied you are with your finances when your spending matches up with your values — and when you stop spending on things that don’t matter to you.
2. Create a Plan for Your Money
Decide on a plan for your money, based on what matters to you. This is a roadmap you can follow to better finances now, and in the future. Think about what you want to do with your money in the next 12 months, and what you want to do so that you can build a foundation that will also benefit you five, 10, 25, and 40 years from now.
A plan for your money is different from a monthly budget with minutiae. I don’t have a set monthly budget. Instead, I have a plan that allows me to build wealth over time. I automatically invest in retirement, save in a rainy day fund, give to charity, and contribute to a 529 for my son. With those plans in place, I don’t need to plan out every trip to the grocery store or every book I buy ahead of time. Put together a plan, and then put it in action.
3. Make Incremental Changes
Trying to make sweeping changes that last can be difficult. While there are some people who can manage it, most of us just get frustrated when we try. Instead of trying to make big changes all at once, make incremental changes to your finances. If you are paying off debt, slowly build up to your preferred debt pay down amount.
Make small changes first. As you become comfortable with the progress you’re making so far, you’ll eventually be able to step up your efforts. Small changes also tend to stick with you longer. Small changes that you can incorporate into your lifestyle are more effective in the long run than unsustainable changes that you abandon after a few months.
Along with making incremental changes, be sure to set realistic goals and timetables. You probably won’t be able to pay off $20,000 of debt in four months. Rather than get discouraged when you fail, set goals that are more likely to succeed, and that you know you can accomplish, even if you have to stretch a little.
4. Work on One Thing at a Time
If you have specific goals for your finances, don’t try to do everything at once. Focus on your most important financial goal first, breaking it down and making incremental changes. Once you have made the life changes that have you on a path to reaching your goals, you can move on to the next item on your list. This is a systematic way to reform your finances one objective at a time.
The key to improving your finances in the coming year is to be systematic and realistic about it. Break things down into manageable chunks so that you can incorporate the changes into your life for the long haul.
