Discover seven modern ways to improve your finances and start taking the first steps towards a brighter financial future. The way you handle your money and the way you approach your finances is going to make a massive difference to your wealth building efforts in the coming years.
Increase The Rate At Which You Save, Invest And Build Wealth
If you are an avid reader of our posts at echeck.org, then this little tip should come as no surprise. However, instead of re-stating the many tips and advice we have given on the subject, I am going to take a slightly different path and consider the step you should take prior to starting to build wealth.
The Step Before The First Step
We often get emails from people saying they simply cannot get started saving, budgeting, investing and building wealth. Some readers say they are too busy paying off debt or bills to get started building wealth. We argue that even “Thinking” about wealth building is positive step towards your future financial freedom.
People who make a plan to save money and start investing, even if it is just a few dollars per week, are obviously more likely to find financial success in the future than people who do not give it a lick of thought. Even if you are just thinking about wealth building on a regular basis, it will affect the way you manage your money and will eventually help improve your finances.
Napoleon Hill was the best motivational writer to ever live, and he said, “Any idea, plan, or purpose may be placed in the mind through repetition of thought.”
A Hypothetical Example To Help Explain What I Mean
Consider this scenario. There is an overweight lady who has dieted for years without success. She then decides that she is going to forget fancy diet fads and simply be more conscious about her level of fitness and her food intake. By simply thinking about her health on a regular basis, she is more likely to lose weight. What you think about and what dominates your mind will have an effect on your actions. The same lady may subconsciously avoid supermarket offers for fatty foods, she may decide to walk rather than drive, and may avoid comfort eating without having to force herself or count calories.
If you cannot get started saving, investing and building wealth for whatever reason, you should make a start by simply allowing the idea of saving and wealth building to dominate your mind. You will be surprised by the long-lasting subconscious effect it has. You may find yourself avoiding unneeded purchases that you would have otherwise snapped up and justified without a second thought. I am not saying that your money problems and your future wealth will rely on the magical power of thinking or belief. I am simply suggesting that you should take the time to think about your future wealth, savings and investments on a more frequent basis.
Try A Few Passive Saving Methods
Passive saving is another powerful and original tip that we have offered a few times on our echeck.org articles to help improve your finances, and it is a personal favorite of mine because it was one of my first steps towards a bright financial future. I started using passive saving when I was younger and massively in debt, and it was one of my first steps towards completely changing my outlook on money, budgeting, wealth and saving.
Out Of Sight – Out Of Mind
You do not need discipline to start passive saving. The idea is that you allow a separate account to fill with money very slowly and you only check on it once per year. One popular method of passive saving is to have a small amount of money direct-debited (auto-paid) out of your bank account on the day that you are paid by your employer. The idea is that you will not miss the money because you never really get your hands on it in the first place.
Another method is to save your change. I recommend that you read our post called The Ultimate Guide To Getting Out Of Debt in which you may read all about saving your change. I have added three excerpts from that article in the images below that teaches you how to save your change.
Learn The Pleasures Of Tracking Your Spending
If you get into the habit of tracking what you spend, it will open your eyes to the many ways you are wasting money and help improve your finances. What’s more, it makes you more cognizant of your spending, and it can actually be fun.
There are apps that you can use to track your spending, but you can do it manually very easily. If you mostly spend using your bank card, then take a look at your online bank account every day and note down what you spend on a spreadsheet.
Tracking what you spend will keep your mind on your expenses, and it will help you generate budgets in the future. In addition, even if you have no budget and no plan for lowering your expenses, it is gratifying to see how your outgoings for certain things have lowered from week to week. For example, if you decide to be less frivolous with the use of your car, you can watch as your gas expenses go down over time.
Automate Your Finances With Direct Debits And Auto Payments
Automating your finances is not for everybody, but it may help to improve your finances. If you are prone to forgetting about your bills, then auto-pay/direct debits are a great way of ensuring that you do miss bills and rack up fees and charges. In addition, many utilities companies around the world are willing to give a slight discount to people who sign up for direct debit/auto-pay payments.
Automating your finances may not be suitable if you are one of those people who like to clear your bank account on a regular basis. If an automatic payment goes out and you do not have enough funds in your bank account, then you will be charged overdraft fees and risk damaging your credit rating. You can opt out of overdraft protection, which should stop your bank from overdrawing your account with direct debits. In that case, you will avoid overdraft fees while still generating fees from missing your bill payments.
Some people prefer to keep a tight hold of their money and do not like the lack of control that automatic payments presents. Some unlucky people will set up direct debit/auto-pay payments and forget to cancel them when their bills/debts are paid off. As a result. they keep on paying when they don’t have to. If you prefer to pay your bills manually and you rarely forget about bills, then only consider automatic payments in cases where you are offered a discount in return.
Set Clear Financial Goals And Take The Correct Steps To Achieve Them
I personally hate “Nothing” advice. “Nothing” advice is rife on the Internet. It is advice that sounds correct but has no usable information. A great example is on dating articles where it says, “Be confident.” It is useless information because nobody can decide to be confident, in the same way that people cannot decide to be shy, scared or sleepy.
Sadly, the header for this section tells you to set goals and take steps to achieve them…and that is “Nothing” advice because it sounds good, but gives you no usable information on how to use the advice. That is why I have added two examples below to show you what I mean.
Example Number One – Billy Wants A Tumble Dryer
Billy needs a tumble dryer because it is winter and he cannot dry his clothes outdoors, and it costs him too much money to put his clothes on radiators with the heating on. He hoped his last tax refund would cover the cost, but sadly it didn’t.
He created a list of things in his budget where he could refrain from spending money and therefore make a saving. In his budget, he listed the things he could avoid paying for, and things that soaked up his disposable income every month.
The first thing he learned was that his budget projections were often very wrong, so his first step was to adjust the way in which he creates his budget projections.
His second step was to identify areas where he was spending the most money. Sadly, he couldn’t lower his dining out budget because he simply didn’t have time to cook most evenings.
His third step was to attend free live theatre performances for three months and he stopped going to concerts for three months. By doing this, he was able to afford a new tumble dryer.
Example Number Two – Betty Wanted To Be Out Of Debt
Young Betty had $2000 of credit card debt that she simply wasn’t paying off because she only paid the minimums each month. What she did was to cut up her credit card and vow to pay off her credit card debt in two years.
Using a payments calculator, she inputted the following information. Her outstanding balance was $2000 and her minimum payments were $55 per month. She discovered that she could clear her debt in two years by paying $103 per month–so that is what she did. If she had continued to pay the minimum payment on her credit card debt, it would have taken her 22 years and 7 months to clear her debt.
Her first step was to make a decision. Her second step was to lower her chances of spending the money again. The third step she took was to set a goal. Her fourth step was to research, and her final step was to start acting on her plan.
Renegotiate Your Suppliers Every Year
Utility companies and insurance companies compete with each other so fiercely that the cheapest supplier this month is often not the cheapest the next month. You can improve your finances by simply switching your suppliers now and again.
Switching suppliers is not as much hassle as you may think, but it still takes time and effort to the point where many people stick with the supplier they have for the sheer convenience of it. That is why you should pick a time every year to switch suppliers, so that you may switch them all at one time.
The best time of year to pick is when your car insurance expires. Go online and dig deep to find the cheapest car insurance, and then go looking for other suppliers you can switch to. Check out which utilities and energy suppliers are the cheapest and make a switch. Consider switching a few of your insurance providers to a find the best value for your money.
When searching out energy and utilities providers, you should always go for the cheapest. After all, your electricity will not become duller if you switch to a cheaper provider. However, when it comes to insurance, you need to switch to the company that gives you the best bang for your buck. Choosing the cheapest insurance company is not always the smartest option.
Discuss And Confirm All Financial Plans With Your Partner
Come up with your financial plans with the cooperation of your partner and it will help improve your finances. Make sure that he or she is on board and an active participant in the financial future of your family and your household.
It is even more important that your partner is an active part of any financial plans if you have children. Any dependants are going to push you into overspending and manipulate you into making poor financial decisions. If both parents are involved in the financial planning process, then both you and your partner can guard your money. It is harder for a child to get around (manipulate) two parents over just one parent. That is especially true when children and teens always ask the parent that indulges them the most because even if that parent caves in. If both you and your partner are equally responsible for the money in the family, then the child/teen still has to convince the less indulgent parent before getting what he or she wants.
Conclusion – Build Positive Habits To Improve Your Finances
Get into the habit of tracking your expense, creating budgets and talking to your partner about money. Associate with frugal people who don’t overindulge, and do not go too crazy on big life events such as your first child or weddings. Try writing your goals and your plans down so that they are more than just an unfulfilled wish. Get into the habit of delaying bigger purchases, such as making your car, washer, dryer, couch, bed, etc., last a few months longer. Give them a few months and you will be surprised by just how UN-urgent many of your must-have purchases are.