There are things that you should do, if you want to take control of current financial situation. If you don’t take actions, things will become so bad that bankruptcy is inevitable. However trivial it may be, you need to take a step to the right direction. Small moves could encourage you to make bigger steps to achieve success in the future. Make sure that you can eventually transform your financial situation, so significant improvements can be achieved. Bad things may snowball and bring enormous impacts in the future.
- Start using a budget: Many people are reluctant to use budget, because they see it as a limiting factor in their lives. In reality, budget allows you to maintain healthy financial situation and comfortable lifestyle. It’s a good idea if your budget is well detailed and impulse buying can be prevented. You will be able to live within your budget and adjust a lifestyle that’s dictated by your budget.
- Slash unnecessary expenses: You can do this only if you have proper budget. After one week or one month, you should be able to see certain pattern and what kind of unnecessary expenses that you have. You should know how much that you spend on transport, food, entertainment and others. You may choose cheaper transportation, such as bus, instead of taxi. You may also stop buying comfort food and choosing expensive entertainment options.
- Pay yourself first: Money should start to pile after you start saving. You should pay yourself by bumping up the retirement contribution. Transfer some money from the savings account to your retirement account. This is a great investment for the future and you can maintain a proper lifestyle during the retirement period.
- Actively remove debt: If you want to remove debt, you should start by making a list of your debts and prioritizing them. Debts that you remove should have the highest interest rate. Debts with higher interest rate will cause you to lose money the most. Create actionable steps to eliminate each individual debt.
- Get prepared for retirement: Even if retirement is still 20 years away, you should start thinking about it right now and doing the right steps. Without the right plan, you are heading for a financial problem. At the current rate, be honest with yourself and consider whether retirement goals can really be achieved.
- Open a health savings account: Health problems can have significant future implications and in some cases, you need to pay tens thousands of dollars for a single treatment. As an example, you may choose high deductible health insurance plan to cover for future health expenses. With proper health insurance coverage, you should be able to save a lot of money when you are sick. Depending on the term of insurance coverage, the insurer will take either full or partial responsibility for your health issues.
- Establish an emergency fund: During the times of trouble, you need to have enough money to take care of various emergencies. An emergency fund should be equal to six months of regular expenses.