Wouldn't it be nice to have enough money to just do what ever you want and never have to worry about debt? Most Americans dream of financial freedom, and many could have it. However, most people just don't know where to start to improve their financial situation.
Reviewing your Situation
The first step to improving your financial situation is to know how you currently measure up. Gathering all of your financial data and figuring out which things are income producing and which things are financially draining is a good place to start. We want to see lots of income producing areas and less financial strain.
The things that could perhaps be on the positive or income producing side might be things like:
- taking advantage of your employer's matching funds for a 401(k) plan
- having an IRA
- having a second job or home based businesses
- maximizing all tax deductions
- having diversified investments like annuities, stocks, bonds or mutual funds
Things on the financial strain or negative side might be:
- lots of credit card debt
- no emergency funds
- no savings plan or investments
- high mortgage payments
- casual spending
Once you have assessed your financial strengths and weaknesses, it is time begin eliminating the weaknesses and burdens and increasing the cash flow and positive income activities. By knowing what things are working and what are not, that is already a step toward improving your financial situation.
Ways to Improve
There are many areas where improvement in savings and reducing financially draining activities can help one gain financial freedom. Some areas to examine are common to most people and include:
More from GFC, Below
- Vehicle use – A vehicle in good running order that is well maintained gets better gas mileage and is less likely to need more costly repairs. This will save lots of money with the high cost of gas and in avoiding future repairs.
- Medications – Americans often have a hard time paying for prescription medications. Consider enrolling in your local pharmacy's prescription drug discount plan (if they have one) and always be sure to get prescriptions for generic drugs when possible. This can help save hundreds of dollars annually.
- Utilities – Utility companies are competing for your business so it doesn't hurt to ask for reduced fees and savings in lieu of switching to another company. Also consider getting rid of any unnecessary entertainment expenses in regard to cable or DVR, on demand movies, extra features on your phone and the like.
- Banking – ATM's outside your banks branch can charge a fee, and those fees can add up. Avoid making many stops to the ATM by planning out spending in advance, perhaps once a week and withdrawing the amount of cash you will need. Also be sure to watch your balance and not overdraw your account. Those over draft fees can be upwards of $35 for each item and that is wasted money.
Of course there are also some basics like skipping the drive-thru, combining errands into one trip, brewing coffee at home, canceling magazine subscriptions, being mindful of cell phone charges, and just general careful spending that can go a long way in improving financial health. Taking the time to set solid financial goals is a great way to improve your financial situation.