Are you paying too much for things like food, cable connection, cell phone bills, etc? If your monthly expenses are outside your budget, you better find ways to cut costs and make more savings to get your finances back on track.
You don’t need to a personal finance expert to be able to cut costs, save and invest your money in assets that will potentially grow in the future. Just follow a few tried and tested steps and you will notice a huge difference at the end of the month.
Follow these 5 steps to get your finances back on track.
1. Install an expense tracker app on your phone
Clarity Money is a personal finance app that acts as your assistant. You can track your spendings Vs. your current monthly income. This app helps you take control of your budget and expenses. It uses data science and machine learning to understand your spending behavior. This is necessary as the app notifies you at the end of every month with a graph that shows your spending vs income.
2. Invest in 401k
Getting your finances back on track also involves planning for retirement right from a young age. Even if you are in your 30’s or 40’s, investing in a 401(k) plan is a must. It’s great if your employer is willing to contribute to the plan.
The money that you invest in your 401 k retirement plan is tax-deductible. For someone struggling with their finances, it is recommended to go for the Thrift 401 k plan. Under this plan, you will get a reduced salary with the 401k contributions already deducted. So, your money is going nowhere except in your retirement fund.
3. Find ways to make extra money
Sacrificing your free time to make some extra cash will be beneficial if getting your finances back is your number one priority. No one likes to work at the end of the day when you are tired and just want to relax. But to execute a successful side-hustle, you will have to go against your emotions and do things that most people are not willing to do. That is, work hard even when you are dead tired.
4. Refinance your mortgage interest rate/student loan
Refinancing your mortgage loan can be a great decision if you find a lender that is willing to lend you money for an interest rate lower than the existing one. You can also look for lenders who are willing the extent the term for the repayment of the loan. You should consider refinancing, even if your new lender is giving you a 1 percent lower rate than the previous one.
5. Cut down credit card usage
Last but not least. Credit cards are one of the main reasons behind persistent debts. Credit card companies are clever and if you are a novice user, you are highly likely to fall in of the hundred different traps laid by them. It is better to keep the credit card usage to a minimum and pay the bills on time.
Even if you are a novice at managing your finances, you should not panic, just follow the tried and tested ways and you will get your finances back on track within no time. Be committed to the recovery process and don’t relapse no matter what. Getting your finances back on track might take a few months(depending on your current situation), so be patient.