Money can feel overwhelming.
The good news is that you can learn how to change that.
I’ve listed 10 ways to improve your finances now.
They’ve helped me go from broke grad to money pro, and I believe they can help you, too.
So, let’s get started!
1. Budget
Love ’em or hate ’em — budgets can help you improve your finances almost immediately.
With a budget, you track your money coming in (your income) against your money going out (your expenses).
If you do this implement a budget, you can feel less money stress every month and actually start having money for things you want to do in life (imagine that!).
Start budgeting by using one of the resources below:
- Budgeting for Budget Haters (a budgeting course)
- The Real Life Money Plan (a money-planning course)
- Budget Spreadsheets (templates you can download right now)
- 21 Days to a Better Budget (a budgeting eBook)
These resources can help you stop living paycheck to paycheck and help you create a plan for your money.
Financial freedom starts with your budget! It’s that important.
2. Make More Money
You need to make enough money meet your financial goals. If you’re not doing this from your day job, then figure out how to make extra money on the side.
Say yes to more hours at work; work toward a bonus; pick up a side job; start an online business. Whatever you do, do something!
Here are my best resources to help you make more money:
When I quit practicing law to become a financial planner, I took a 50% pay cut. Because of my student loan debt, I needed to make more money asap. This is why I started a blog (and if you’re interested in blogging, you can join my free 5 Day Blogging Bootcamp email course). Three years ago, if you told me I’d be making thousands a month from blogging, I would’ve thought you were crazy.
That’s the beauty of it. You can learn how to make extra money sooo many different ways. From Uber to learning how to work from home as a virtual assistant, there are countless ways you can make extra money on the side.
Whatever you do, find ways to make more money every month so you can reach your financial goals. Don’t let your lack of income be the excuse you use to stay broke.
3. Set financial goals
You need to set financial goals if you want to change your finances.
Examples of goals can be to get out of debt, pay off your student loans, or save for a new car.
Whatever your financial goals are, make sure you write them down and use the SMART method of goal setting. Download my Goal Setting Action Plan to learn exactly how to set goals. In the meantime, just know that goals should be:
Specific
Measurable
Actionable
Realistic
Timely
Your financial goals will move you from where you are now to where you want to go. Without them, it can feel impossible to make progress financially.
4. Track your net worth
Start tracking your net worth to see where you are financially. Tracking your net worth is how you measure your overall financial health at a given time. It’s a good indicator of where you stand financially today.
To track your net worth, use my net worth spreadsheet. This will get you in the habit of calculating your own net worth, instead of just using an online aggregator.
To track your net worth, subtract your liabilities from your assets (net worth = assets – liabilities).
Every month or quarter (whichever you want), update your net worth. This will show you how much your net worth is increasing (or decreasing!) over time.
If you want to have financial success, measuring your net worth is a must.
5. Build an emergency fund of at least six months of expenses
Financial experts recommend saving an emergency fund of three to six months of discretionary expenses, or even more depending on your sources of income (if you have one source versus three sources every month). The one thing that I know for sure is that having an emergency fund takes away the fear around emergencies with respect to how you’ll pay for them. The emergency still may stink, but you won’t stress and worry about how you’ll pay for it if you have money saved. And emergencies will happen. They happen to everyone.
6. Get out of debt
Create a plan to get out of debt now. You owe it to your future self to get out of debt now so you don’t have to worry about it later.
As of last month, I have paid off $100k of student loan debt. This started after law school when I had $206k in debt from undergrad and law school. I still have a long way to go, but I’m using my blog income to help and hopefully pay it all off in the next couple of years. After focusing on my own personal financial education, I committed to a plan to get out of debt.
If you understand how much you get back every month by paying down your debt (which is exactly what you pay in interest), then getting out of debt becomes too good of a financial option not to do as a top priority.
This is why taking a course like Budgeting for Budget Haters becomes almost necessary — it’s really hard to do this stuff alone. It’s so helpful to have someone guide you through how to create a budget that can help you understand why it’s important to pay off debt — and how to do it asap.
7. Save for retirement
Start saving for retirement as soon as you can. There are so many different ways to save for retirement, but a great place to start is with your employer’s plan. If your employer offers a match, it’s a good rule of thumb to invest up to the match at the least. If your budget allows you to save more, then save more (or up to the max). Saving for retirement early is really important because you have the advantage of time that older people don’t have.
It’s not enough to simply start saving for retirement. You need to learn the basics of retirement saving. For that, start by reading Retire Inspired by Chris Hogan.
8. Check your credit reports and your credit score annually
Check your credit reports and credit score annually for free using AnnualCreditReport.com. Not only will you be aware of your score, but you will know what is on your reports and whether there is any incorrect information listed. This is one way to know whether you’ve been a victim of identity theft. I can teach you How to Check Your Credit Reports & Credit Score in this step by step guide.
9. Get insured
Make sure you have the right types of insurance in place. This is really important for some people (like if you’re married or have kids). If something tragic happens to you, having the right type of life insurance can mean knowing that your family will be financially. This type of security is priceless. To decide what types and how much insurance you need, look at different companies and compare prices using a brokerage service like Policy Genius. This will give you a way to compare policies and decide which plan is best for you.
10. Focus on building assets
Assets increase your net worth and are the key to building wealth. Wealthy people have assets (something I first learned from the book Rich Dad Poor Dad by Robert Kioysaki). If you want to build wealth, get out of debt and acquire assets. You’ll watch your net worth grow, and you’ll be amazed at how you can change your financial future just by adhering to simple rules.
A Final Note!
Three years ago, I knew nothing about money — at all.
Now, I’m a personal financial planner and blogger. I followed the steps above and changed my financial future.
I’ve paid off $100k (and counting!) of student loan debt, and I’m a spender at heart, too. So, if I can do it, I think you can, too!
Here are my favorite resources to help you improve your finances right now:
- Budgeting for Budget Haters (a budgeting course)
- The Real Life Money Plan (a money-planning course)
- Budget Spreadsheets (templates you can download right now)
- 21 Days to a Better Budget (a budgeting eBook)
- Goal Setting Action Plan (an eBook to learn how to set goals)
Keep focusing on your financial life. You’re too important not to!
Really cool tips, Natalie. Just tracking our expenses and doing some budgeting really pushed us forward when it comes to our own finances. I wished I did this earlier, I wasted at least 15 years of my adult life careless about money.
I think budgeting is probably the most popular of these steps, Ramona, so that’s awesome it’s working for you, too!
Yep, this is all really adult stuff! We’re doing it all now, but we weren’t until our late 20’s. Adulthood gets easier when you have your stuff together and actually care about your dreams and goals.
Amen to that!!!
Great advice, Natalie. I agree that creating some margin–through savings, lowering expenses, possibly side hustling–is key. We have made financial flexibility our goal. The more margin we create, the more options we will have both now and in the future.
Kalie @ Pretend to Be Poor recently posted…Rocking the Burbstead: How We Homestead on 0.1 Acres
Margin is so underrated, Kalie!
Number ten really speaks to me. There have been times when I made unwise decisions financially and it really affects other aspects of your life. Simply asking yourself “Is this the best decision given my financial situation right now?” is a great habit.
Aliyyah @RichAndHappyBlog recently posted…April 2016 Online Income Report
SO important, Aliyyah! If we all did just this one alone I think we’d be in better shape.
Oh my gosh, adulting is so hard! It took me years to learn how to handle being an adult and deal with finances! All of these points are great, but I really wish I had started an emergency fund when I was younger. I just had no idea about things 🙂
Amen. Same here!! Better late than never!
Budgeting is really important whether you are making a lot of money or a little. Even multi billion dollar companies have a budget which if you think about it makes sure that they stay in the green. If we put that effort in we too can be successful.
Making big purchases carefully is a great tip. With our current house I think my wife and I agree we didn’t realize 1) the time it would actually take to do bigger renovations ourselves or 2) how much exactly it would cost to change the house. If we had thought about it a bit more we may have went for a smaller house that was more updated. You live and you learn.
Goals are really important in getting financial life in order. I listed my goals so that I am fully aware of my priorities and can make changes accordingly in my budget. Without goals, I don’t think I would be successful as goals give me direction in achieving my financial goal one after another.
Number 10 is my favourite! I wish I had known all of this at the puppy age of 18! But at least we know it now 🙂
Natalie, I like that you pointed out that it would be a good idea to set some financial goals. That way you always know what you are working towards. That might also make talking to professional financial planner a lot easier because you can tell them what you want to get out of their services.
Great article that highlights the details of adult finance. A lot of young adults that are not independant yet do find it increasingly hard to transition into an adult that has to manage bills, mortgages, contracts and finance in general. The key message to get across is to always PLAN AHEAD!
I analyze all aspects of any financial decision I make. For example, before I make decision “x” – I think about how will it impact my life positively or negatively. I write these points down and it helps me to figure out if the decision is a good fit for me or not. Great tips, thanks for sharing!
I never knew that there were apps to help with budgeting. I think that I might download one. I’ve recently got into keeping track of our spendings because we’re trying to budget better. Only because we want to save up for a house someday.
Having enough money set aside is probably my biggest worry, so totally agree there. However, I think that you should definitely distinguish between good debt (used for investment) and bad debt (used for personal and consumer products) and between essential assets (like your only car) and disposable assets (investments) in your net worth.
It was meaningful to learn that If you get married and buy a house, you increase your responsibilities and make it harder to get out of debt. I am getting married in January and my husband still has student loans that he needs to pay. Looks like we will need some professional help before buying a house!
These are such great tips Natalia. I’ve got into the habit as well of paying myself first. I will always take 10% of my pay and put it into a bank account i cannot touch. This way I know i’ve got some control over my money each week and putting myself first.
Amanda
I like that you said that we need to consider our past experiences. Whenever I buy anything I make sure it is something that I will use after the first use. Buying something that you don’t use, I think, is a waste of money. You might want to hire a professional to help you with finances if you are struggling.
nice work.
These steps worked for me! I was age 32 in the mid-eighties when Money Magazine published an issue full of planning worksheets; no computer programs back then, had to do all the math by hand. It was actually kind of a fun process, and was instrumental in heading me in the right direction.
I begin Medicare a little later this year, I’ve been totally debt free since age 59, and the part time business I began as a tax preparer in the 90’s is now my sole source of income. I work hard for about three months, and then it’s R&R for the other nine.
I’ll be passing your blog address along to all my clients via my newsletters.
That is amazing! It sounds like you’ve been on the right track for a while!
Love this list!!! I never thought of keeping track of my assets. Great advice!
Yes, you are 100% right on this, I was wasting my young age to save the money but now im realizing, your tips are an eye opener to anyone, keep post like this because it could be helpful for anyone to upgrade their life am I correct?
I appreciate the tip about building a fund of discretionary expenses for at least three months. I’ve had a really hard time sticking to a savings plan in the past, and I’m worried about how I might pay for an emergency. Maybe it might be good for me to ask a professional for advice on how to start saving.
Keeping track of my credit score and paying down debt have been the best for my financial health. The longer your credit cards or student loans hold you down, the less money you’re going to have for yourself in the long run. Thanks for sharing!
I used to think we could always do #10 later… but it is later! We’ve got 3 kids with a 4th on the way. Even though they are little, it’s important to prepare for when they are out of the house.
Great tips! This year I finally took control over my finances and I was able to save a lot of money, but it gets more difficult to stay on track. Your post motivates me to keep going 😊
I’d like to buy a house but it’s so difficult to save enough money for this purpose. This article is a real help and my favourite part is about setting an action plan in order to change the way of spending finances. I’ll definitely set up an appointment with a financial consultant and discuss these recommendations in order to make sure that I do everything right for fulfilling my dream.