It has been a very trying past couple of years for everyone, and with that, there is a real desire and urge to get back to a more “normal” way of life. For many people and families across the country, one of the biggest issues has been how the pandemic has affected their finances. It can be very frustrating to look at your current situation and realize just how far off from your financial goals you are. Rather than allow 2022 to be another year where your finances take a hit, why not take active steps to improve the situation? Here are four ways you can improve your finances this year and start to get back on track.
Create a Realistic and Accurate Budget
The first step in improving your finances needs to be to create a realistic and accurate budget. Without this step, you will be flying blind, unaware of how your expenses stack up against your income. There is no need to be a financial whiz to create a budget, as you can find all kinds of budgeting apps – many of which are free – that will make the process a breeze.
When browsing through the available apps, look for one that offers additional tools such as real-time budget/expense tracking, the ability to set payment reminders, the option to set financial goals and so forth. Of course, a budget will only be helpful if you commit to using it and sticking to it. Expect this to be difficult at first, especially if you’ve never used a budget in the past. Over time it will become a habit and you’ll no longer be thinking about it.
Cut Back on Miscellaneous Expenses
One of the greatest parts about creating a budget is that it will highlight areas where you can make cutbacks. Miscellaneous expenses are usually one of the best categories to focus on, as there’s a good chance you can make some concessions. This category can include such things as:
- Clothing
- Dining out
- Entertainment out of the house
- Makeup and beauty related purchases
- Streaming services (especially if you are subscribed to more than one)
This particular category can be vast and is open to interpretation. Remember, the more you can cut back on from one particular category, the more cash will be freed up to be used in other ways such as debt repayment or savings.
Determine Just How Much Your Credit Card Debt is Costing You
Own one or more credit cards with a large balance? This is another area that should get attention. It’s important to understand that the debt you owe is more than just the balance, as the interest builds very quickly on credit cards.
The debt payoff calculator from Tally is a user-friendly tool that makes it possible for you to figure out exactly what you owe and how long it will take to pay it. To say the debt payoff calculator can be an eye-opener is an understatement. Tally’s results will also provide you with an alternate strategy through their credit line, which can help you to lower your monthly payments.
Credit card debt is a slippery slope because what may not seem like a huge purchase can start to snowball the more you charge. Simply paying the minimum every month will ensure you never pay off the card, and instead, you spend a small fortune in interest.
Find a Way to Make Supplemental Income
Sometimes, even with the best budgeting and making smart deep cuts to expenses, it still won’t be enough. Look for ways to make a supplemental income. This is extra income above and beyond your regular job. This could be in the form of a part-time position, contract work, freelancing or any other way you can make extra money. Supplemental income can be used to pay bills, or it may be what you use as savings, allowing your primary income to be used for the everyday stuff instead.
Another great thing about supplemental income is that this doesn’t have to be a permanent solution. Perhaps you are trying to save for a big expense like home repairs, a down payment for a new car, or that holiday you’ve been dreaming of. Once you reach the savings goal, the supplemental income may no longer be needed.
You Can Turn Things Around
No matter how stressful your current financial situation is, the good news is that there are ways to make positive changes and turn things around in 2022. It may require some sacrifices and a rather strict budget, but it’s important to keep your eyes on your financial goals and remind yourself how great it will feel to achieve them.
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