Few people can count themselves lucky enough to be in a great financial situation. In fact, most people have to deal with debt of some kind. Finding yourself in a less than favorable financial situation may not even be your fault. It's not uncommon to fall into debt due to a financial emergency, after all. Fortunately, whether it's due to certain life situations, poor financial management, or poor luck, there are plenty of ways that you can improve your financial situation. Following are seven personal finance hacks that you should consider implementing to begin improving your finances right away:
1. Establish a budget
The first thing you should do is to create a personal budget. Write down a list of everything that you have to pay for every month, including all of your bills. Then list things like groceries, transportation costs (such as gas for your car) and the like. Compare the total to your income and use what's left to determine how much you can afford for entertainment. Use this budget to prevent yourself from spending recklessly. Without a budget, it's easier to go into more debt, especially if you're using your credit cards.
2. Begin tracking your finances
To make it easier to stick to your budget, begin tracking your finances. Write down everything you spend money on so you can compare it to your budget. While you could use a spreadsheet, it's easier to use a personal financial management product such as i-bank's free Money Management. By tracking your finances, you're much more likely to stick to your budget.
3. Set up automatic payments
Paying your bills on time will help you maintain a strong credit score and help prevent late fees. Unfortunately, when you have a lot of bills, it can be easy to lose track. Setting up automatic payments for your bills will ensure that you don't forget to pay them, which may result in unnecessary late-fee penalties.
4. Use cash only
The less debt you're in, the better. It's why you should focus on paying down your credit cards if you have any high balances. Low credit card usage can help improve your credit score. Not to mention that maintaining a low credit card balance provides you with some flexibility should a financial emergency arise. To help lower your credit card balances or keep them low, use cash wherever possible. It can be easy to lose track of what you're spending money on when using your credit cards, and most credit cards carry high interest rates to boot.
5. Transfer your balance to a no-interest credit card
If you have an exceptionally high balance on one of your credit cards, it can be a real challenge to pay off, especially if you have a high interest rate. One way to get around this is to apply for a credit card with a special no-interest rate and free balance transfer offer. You can then transfer the balance of your old credit card to your new credit card, so you don't have to pay interest. Just keep in mind that zero interest rate offers rarely last for longer than 12 to 18 months. This means you'll need to pay your balance down as much as possible before the offer expires and a new interest rate kicks in.
6. Consolidate your debt with a personal loan
If you're having a tough time climbing out of debt due to high interest rates, you may want to consider consolidating your debt. To consolidate debt, take out a personal loan and use it to pay off all your other debts. Not only will you lower your monthly payments since you've consolidated all of your debts to one single debt, you'll likely be paying a lower interest rate on the loan you took out (especially if you used it to pay off credit card debts).
7. Begin saving money
Just because you didn't start putting money away for retirement the day you got your first job doesn't mean it's not too late to begin now. Consider budgeting a certain amount of money every month to be put away in a savings account. If you don't have room in your budget for this, consider an automated savings program. Many banks offer savings accounts in which they will round up the transactions made on your bank card and put the difference into your savings account. Independent Bank's i-Round up program is a perfect, proactive option for customers holding both an i-bank Checking account and a Savings account. Taking advantage of this is a great way to save money in small increments.
These are seven personal finance hacks that can help to significantly improve your financial situation as soon as you begin to implement them. The quicker you start to improve your current financial situation, the better your financial outlook will be.
