words Al Woods
Almost everyone is worried about money nowadays. Prices are rising and money doesn’t go as far as it once did. Not only that, but debt is practically an epidemic in households around the world. But the good news is that it’s always possible to level up your bank balance.
The thing about money is that it’s easier to improve your financial situation if you already have some cash to play with. It gives you a safety net and makes it possible to save or invest while reducing the amount of debt you go into.
Here are some ways that you can improve your financial situation and get yourself back on your feet so that you can be more financially secure for the future.
Increasing Your Income
There are two primary ways to achieve a healthier bank balance and get more money. You can increase your income, which means that you have more coming in to play with. You can also lower your spending, which means that you can change what you do with the money you already have. The best way to improve your financial situation is to work on both of these methods at the same time.
Increasing your income is never a bad thing, and there are plenty of ways to go about it. Sometimes your income will naturally increase as your career progresses, especially if you work full-time at a skilled job. If you can train more skills, then you can find better job opportunities in your industry.
Side Hustles and Businesses
However, there are other options to raise money outside of your primary job. Many people start side hustles, using their spare time to make a little extra money. Even a little bit can help to lighten the load on your bank balance, especially if you put it to good use. Some side hustles can develop into profitable home businesses and you could even turn your hustle into your primary income stream, given enough investment and development.
Passive Income and Investments
You can also increase your income by taking advantage of passive income opportunities. The real estate industry, for example, is a fantastic way to do this. If you invest in property, you can rent it out and earn some extra income. You can then sell the property if you need to make the money back for a larger bonus.
Investing is a good option for passive income in general, but it does come with a measure of risk. Always consult a financial advisor when investing your money and only invest what you can afford to lose. If you’re struggling to begin with, investment isn’t the way to go.
For other ways to increase your income and do more with your money, you should visit financialadvisers.co.uk and find someone who can help with your specific situation. A good financial advisor should bear your circumstances in mind and give you fitting, focused advice.
Reducing Your Spending
It isn’t always possible to increase your income by a significant amount, but most people can reduce how much they spend. Before you can work on this, it’s important to figure out how much you spend each month. Go back at least six months so that you can factor in an average expenditure rate and include your different bills and loan repayments. If possible, go back even further for as accurate a picture as possible.
Once you have a good idea of how much you spend per month, as well as how much you earn, you can work out where your money is going. If your expenses outweigh your earnings, then you may have a serious problem and be on your way to debt. However, even if your finances are relatively healthy, it always pays to strengthen your situation.
When you figure out where your money is going, you might be able to see some easy solutions for reducing your spending. For example, if you are subscribed to a service or product that you rarely use, then you can instantly save some money by cutting out that expense.
Setting a Budget
Most of the time, however, it isn’t that easy. In these cases, you will need to set a budget and break down your spending into what’s necessary and what isn’t. It’s difficult to cut down on necessary expenses, like food or heating, but sometimes you can shave off some money by reducing waste.
If you can, lower the temperature in your home and install a system that allows you to control which rooms in your house are heated. This way, you can make sure that you aren’t heating rooms that don’t need it. Making sure that your house is insulated also keeps the costs down, as it prevents heat from escaping. If nothing else, blankets and warm hoodies are a great way to make do in a cooler home over winter.
When it comes to food, you can cut down on how much you spend on food by reducing snacks and other unnecessary items. You can also save food where you can, by reusing leftovers and reducing food waste. This way, you can stretch a meal out for longer.
However, most of your budget savings will come from cutting out unneeded expenditures, like the aforementioned subscriptions and money spent on days out. You shouldn’t cut these miscellaneous or fun purchases out entirely, but you can always limit the amount you spend on them.
A strict budget is better for short-term savings, but if you plan on keeping your budget as it is, then you should make sure it’s flexible enough to last. Ideally, keep spendings beneath the budget, so that you can put any money left over into your savings account. Always budget for saving and paying off debt.
Paying Off Debts
Debts are one of the most difficult things to budge from your finances, and they can hold you back from saving money and putting it somewhere worthwhile. Millions of people have different kinds of debts, and some people are in a debt spiral that seems impossible to get out of.
A common mistake people make is to only pay off the minimum amount on their debts. This seems like you’re spending less, but the interest rate is a constant drain on your finances over time. A better option would be to pay more in the short term to pay off the debts and rid yourself of the interest entirely.
There are a couple of strategies to make this easier. One method is to pay off your debts one at a time. You can keep paying the minimum on each of them, but then put as much as you can to pay off small or high-interest debts as quickly as possible. You can then put the money that you would ordinarily spend to pay off that debt into paying off another debt, and so on. You can then eventually clear the board of most of your outstanding debts and put the money you save somewhere else.
Another option is to take out a consolidating loan for all of your debts. This means that you only have one loan to think about, with one set interest rate. This makes paying the loan off simpler, as you don’t have to worry about juggling different loans and potentially missing one out. Sometimes you can even get a lower average interest rate as well, saving money and making it easier for you to pay it off quickly.
Once you’re free of debts, your bank balance will start to look a lot healthier.
