Learn how to improve your finances. This guide will take you through the 10 simple steps to improve your finances.
10 Simple Steps to Improve Your Finances: In the not-so-distant future, the year 2022 may seem like an unattainable goal—until you start to see your bank account grow, month after month, with the ways you’re improving your financial picture.
10 Simple Steps to Improve Your Finances in 2022
That’s right! By following these 10 easy ways to save money and improve your finances in 2022, you’ll be well on your way to saving more and spending less. Your future self will thank you!
Step 1: Start Saving Money Today
Instead of waiting until January 1, start saving money today. Instead of going out with friends, try hosting a poker night at your house. Or plan a movie night at home instead of going to an expensive theater. You’ll be surprised how quickly you can add up savings when you just replace some nights out with nights in. (If you have no idea where to start, check out our guide on How to Start Saving Money Now.)
Step 2: Automate Your Savings
One of life’s greatest pleasures is being able to put your feet up at night, knowing that you don’t have to worry about money for a little while. If you want that feeling more often than once every few years, you need to automate your savings. It’s easy: Open a high-interest savings account, set up an automatic transfer from your checking account into it each month, and let it do its work.
If you can commit even $100 per month—let alone $1,000 or more—you can have a nice cushion built up by next year. Remember: The longer you save money, rather than spend it right away, the more time compound interest has to work its magic on your balance sheet. You may not be able to see it now, but if you make regular contributions over several decades, you could end up with hundreds of thousands (or millions) in extra wealth.
Step 3: Create a Fun Budget
Budgeting is a lot easier when you treat it like a game. You might not want to play Monopoly with your money, but why not turn it into a competition? Make budgeting fun by seeing how well you can do, or challenge yourself by setting up an account for your friend and family members. If you earn $50,000 annually and save 20% of your income, then there’s only $20,000 left to spend every year—just $100 per day! Turn that loose change into a jar at home; consider allocating more money than you think is possible to each category each week.
Compare yourselves at end of each month; it’ll be interesting to see where everyone falls short. The goal isn’t to beat anyone else, just to stay on top of your own finances. If you have children, involve them too: Set up a bank account for them and encourage them to contribute as much as they can (with help from their parents). When they learn good habits early on, they are likely to keep those habits throughout their lives.
Step 4: Cut Down on Fast Food
It’s a bad idea to completely eliminate fast food from your diet, but there are ways to cut down on how much of it you eat. Plan ahead, cook more at home, and pack leftovers for lunch. If that’s not realistic, try freezing a healthy meal or two on nights when you know you won’t have time for cooking. This will take a little bit of planning—as well as some freezer space—but it can save you tons of money over time. You could also snack on fruits, vegetables, or whole-grain crackers instead of processed foods like candy bars.
Step 5: Use cash instead of credit cards
While credit cards can be a great tool for earning rewards, they also encourage you to spend more than you normally would by giving you an easy way to buy now and pay later. Studies have found that people use credit cards, which often have variable interest rates, as an excuse not to budget effectively. If you do choose a card with an annual fee—which most reward cards do—choose one with a small fee (about $40) or no annual fee at all.
It’s also a good idea to regularly check your statements online, especially during periods of high spending; if there are any charges on your statement that seem unfamiliar or aren’t from services or stores you use frequently, contact your bank immediately. You may want to consider using a debit card instead of a credit card since it will give you instant access to your money without having to worry about late fees or overspending.
Step 6: Add up your monthly expenses
Figure out how much you’re spending each month on all your expenses, from rent or mortgage payments, utilities, transportation costs (like gas and auto insurance), food, entertainment, pet care needs (think dog food or kitty litter) — anything that requires you to fork over money. This includes stuff that’s so small you never think about it like a $4 latte every morning. Once you’ve figured out all of your monthly expenses for 2016, compare them with last year’s expenses.
If they’re higher than last year by more than 5 percent, it’s time to reassess your budgeting priorities. Maybe it’s time for a second job — one where there is no extra charge for health insurance benefits. Or maybe it’s time to move somewhere cheaper. It might be worth asking family members if they’d be willing to chip in some cash towards your living expenses as well — but don’t be surprised if they say no! After all, you are an adult now and need to take responsibility for yourself.
Step 7: Separate wants from needs
This may seem like an obvious step, but if you can’t afford an expensive vacation or a big-screen TV, it’s time to reevaluate. We all have different priorities, but generally speaking, we should spend more on experiences than things, even though they cost more in terms of cash outlay. You could buy a brand new television or take a weekend trip to Napa Valley. Both of these options will result in memories that will last a lifetime. (Of course, deciding which one is best is completely up to you.)
Things have an expiration date; experiences don’t. If you’re worried about wasting money on frivolous purchases, think about how much you’re spending on them versus how much joy they bring into your life. And remember: It’s easier to live without something material than it is to live without something memorable. Be mindful of what brings value into your life—and what doesn’t—and make your choices accordingly.
The trick with cutting back, however, is knowing where to start. The temptation is always there for me to go from frugal to cheap — depriving myself until I’m miserable and broke — rather than being sensible about my spending habits while still having fun with my friends and family.
Step 8: Look for deals, coupons, and rebates
Deal hunting is a hobby of many frugal shoppers, but one that can be taken too far if you’re not careful. Coupons, rebates, and special offers are everywhere – even at chains with very high-quality products – but only a small percentage of people take advantage of them. One way to save money on almost anything you buy is by finding savings on every purchase.
You have many options: clip coupons from newspapers or mailers; use an online coupon aggregator like SavvySaver or RetailMeNot; set up a Rewards card account at your favorite store; or sign up for an affiliate rewards program like those offered by Amazon, Starbucks, or Uber. These programs provide bonuses for everyday purchases, meaning you don’t have to do anything extra.
Step 9: Shop at the grocery store instead of restaurants
While restaurants may offer convenience, there are a lot of other options out there that can be just as convenient. Most grocery stores sell prepared takeout food these days, saving you from making an extra stop. There are also plenty of frozen meal options available at most grocery stores that are simple to prepare with little-to-no clean-up afterward. In addition, shopping for your groceries yourself means you’ll know what’s in your food and where it came from.
It’s also important to note that many restaurants serve meals larger than necessary, which ends up costing you more money over time (and possibly a few pounds). By doing your own grocery shopping instead of going out to eat all the time, you could save thousands each year – without even having to put much thought into it! This is why we wrote our guide to Meal Prep. Check it out if you want to start eating healthier without spending any additional time in the kitchen.
There are literally dozens of ways to cut costs when eating out, but some will work better for others depending on their personal preferences and lifestyle. We suggest trying a variety of strategies until you find one or two that really work well for you. You don’t have to stick with them forever, but by experimenting with different tactics, you’ll be able to discover what works best for your specific situation so that finding new ways to save becomes easier down the road.
Step 10: Negotiate with creditors (credit card companies)
Figure out which one of your credit cards has the highest interest rate. Call them up, or e-mail them if you feel like an idiot talking on a phone, and ask for a better interest rate. When they say no, ask why not, and tell them that you’d be willing to change card companies if they don’t offer you a better deal. Sometimes it works! If not… Get rid of that card as quickly as possible!
If you follow these ten simple steps, your finances will improve drastically in a few short years. The power of compound interest is incredible, and as long as you start now (this year) with just these small changes, it’s almost guaranteed that by 2022 your savings will be impressive.
With any luck, you’ll have paid off all of your debt, built up a sizeable emergency fund, become wealthy enough to retire or pursue other goals, and maybe even started saving for someone else’s college education. Best of luck! I know how hard it can be to save money but if you put just a little bit away every day/week/month it’ll add up very quickly.