Personal finance articles often look at the big picture, helping you think about how to save for retirement or a house and secure your long-term financial future.
This is actually an appropriate way to view your personal finances, but at the same time, sometimes you just want something you can accomplish in the short or medium term. It’s easier to achieve your goals when you give yourself milestones to reach along the way.
The tips below are all things you can do that will improve your financial standing in under a year.
1. Create a Budget
If you don’t already have a budget, this step can have a huge effect on your personal financial fitness. If you tend to use a debit or credit card for everything or keep your receipts, you may be able to reconstruct several months of spending by digging back through your records.
If this isn’t feasible, tracking your spending for a few months with the help of an app can be very revealing. Once you have a few months of data, look for ways to save and give yourself a weekly or monthly spending budget.
2. Refinance Loans and Reduce Debt
You might assume that any payments toward debts are fixed, but you may be able to reduce what you owe. For example, if you have student loans, see if you can save by refinancing with a private lender.
A student loan refinances calculator can help you determine how feasible this is. If you have high-interest credit cards, you might be able to roll the balances onto a lower-interest or no-interest card or take out a personal loan at a lower interest rate to pay them off. Refinancing your home or car could also save you money.
3. Start an Emergency Fund
Having an emergency fund that you can turn to when unexpected expenses crop up can go a long way toward giving you financial peace of mind and providing practical help. Instead of putting that big vet bill or car repair on your credit card, you can simply dip into your emergency savings.
However, some people struggle to build this fund. They read that it should be three to six months of expenses at a minimum and wonder how they will ever save that much. Instead of thinking of three or even one month, scale down your plan. Aim for $500 to start with. More is better, but if you put away just $10 per week for a year, you’ll have a small emergency fund that can still make a big difference.
4. Make a New Habit
Choose one small new habit to practice that will improve your financial life. It might be setting up your bank account so that a certain amount from your paycheck is automatically transferred to savings.
It could be throwing all your change into a jar at the end of each day and saving it or cutting out a costly habit, like buying lunch out every day instead of bringing your own a few days per week.
It shouldn’t be a drastic change, just something small that can result in real progress.