These guides won’t change your finances overnight or in several days ahead unless you are a lucky bastard. Still, these guides will help you to have better finances when you follow it patiently and persistently on a daily basis.
But over times, days or even years, you can improve your financial life.
Income should be greater than expenses
Well, this is a hard truth but this is the first guide and I can say the most important one. This is the basic. Other fellow humans will say to keep improving your income. They even suggested you have a side job or build a steady passive income source. But the problem is usually your spending and lifestyles will follow your income improvement. Most people do know this but they can’t admit it or they think it is normal. Others experienced this too.
Actually, you can control this. It is fine and even better to keep your income improving but at some point you need to control your spending. I don’t suggest to live frugally but you can try to keep your spending far low compared to your income. Personally, I always try to keep our monthly spending at maximum 60% from our monthly income. On some months, we are even able to have 50% or less spending compared to our monthly income. Honestly, it feels content and good.
This includes the use of credit cards. Even if you need it for an online transaction, there are many debit cards which can serve you as good as your credit cards. The main difference is, you don’t have debt when you purchase something with debit cards. If it is not possible, it’s wise to keep it one credit card only and use it as little as possible. Without debt, your financial life will surely get better.
If you already had it, then try your best to pay it off. The rule: don’t pay off debt by using money from your other loans. It is not good. If you have not yet had a pile of debts, it’s best to avoid it at all costs.
Specifically a saving for an emergency. You don’t know what’s coming to you in the future. If needed and possible, then you can automate this (consult with your bank). How much? It depends on your family member, your family lifestyles, and how much is your expense. Some experts said to have around seven up to ten times of your monthly income.
This will relate to how you spend, especially on the urge to buy something that you want but you don’t really need. You need to learn how to improve your self-control when everything is coming to you with their offers and promotions, or their best deals. Usually, this associated with luxury things like high-end smartphones, very cool cars, or other expensive stuff like jewelry. Most people thought this is happening mostly on women though it happened on men too.
Sell unused stuff
If you happened to have some stuff you rarely use, or even you never use or did not use them anymore, then it indeed makes sense to sell them. Though you won’t earn significant income, it probably helps you to suppress your expenses.
Let’s see this case. John had two cars in his garage. The older one was actually his father’s car. Now his father had passed away. John decides to make up his mind to sell that car. Before that, he takes a picture of it, and treat it as a memento from his father. This way, John may not earn significant money but he is surely reducing his expenses to wash that car, pay the tax, pay the maintenance cost, and save time to do all of those activities.
Lower your life requirement
Instead of buying a bigger house, why don’t you keep your small and beautiful one, then try to tidy everything up so you can make more rooms there? There are already many stories out there that people keep trying to afford bigger and bigger shelter, much more than they really need.
The same thing applied to other areas of life. When starting a new habit, why don’t you just started it and let go your urge to buy the supporting stuff? I saw many people buy the outfits for gym but they only use it once or twice before they give up to go to the gym
Actually, there are still many more ways to improve your financial life. However, those four are the basics, especially the first one. If you can set your expenses always far lower than your income, you will surely have more rooms for paying off debt if any and build up your savings. Don’t forget to always get yourself in-control to buy only stuffs you really need to.