4 Steps to Improve Your Financial Health

by Josh Biggs in Finance on 11th September 2020

Many people experience financial difficulties and have goals to boost their finances and savings. Fortunately, there are plenty of ways to turn your finances around and get into a stronger position. Small, manageable changes to your lifestyle can have a big impact on your finances and help you achieve your long-term financial goals. Below, you will find four steps to improve your financial health.

Step 1: Spend less than you earn

This may seem obvious, but spending less than you earn is one of the easiest ways to save and improve your finances. Spending more than you make each month is a surefire way to get into debt and financial trouble. It will also make it impossible to build your savings or prepare for your financial future. With this in mind, you need to create a monthly budget and keep your spending below what you earn each month. Ideally, you should aim to save at least 20 percent of your salary each month according to financial advice on tiaa.org. A simple way to reduce your spending is by cutting unnecessary expenses from your lifestyle. For instance, you could make coffee at home instead of visiting expensive coffee shops. You can also take advantage of discount codes like ShopHQ coupons to save money on purchases and reduce your overall monthly outgoings.

Step 2: Automate your savings 

Financial specialists often use the term ‘pay yourself first.’ Automating your savings is doing just that. It means that you automatically transfer some of your monthly salary into a savings account before you pay any expenses such as rent or utility bills. This approach to saving is far more effective than seeing what you have left at the end of the money because it helps to control spending. You are much less likely to take money out of your savings account than you are to spend money sat in your current account. Set up a direct debit and arrange for a sum of money to be automatically transferred to your savings account at the start of each month.

Step 3: Pay off your credit card 

Having credit card debt can be a tricky obstacle to improving your finances. If you don’t clear outstanding debt quickly, then you will end up paying large amounts of interest. Late repayments may also harm your credit score and make it difficult to apply for loans in the future. With that in mind, you need to create a clear plan to pay off any outstanding debt. You should always try to pay the same or more than the minimum balance if you can afford to, as this will help you clear the debt quicker and pay less interest. 

Step 4: Review your insurance policies 

Taking out quality insurance is an important step to protecting your finances and future. Having adequate insurance will make sure that you and your family are secure if your finances are affected because you are ill and unable to work, for example. Make sure that you review your insurance policies regularly and check that they provide the correct levels of cover.

Categories: Finance