How to Improve Your Finances
Last few days I have been blogging a lot about finance topics. This is because every new year we make sure to add some goals but we don't take actions.
Instead of focusing goals, we can change or replace few habits as the time goes ahead. When you want to improve the finances, you just have to change few financial habits.
If you check my previous post, I explained why women should focus on the emergency funds and plan financially.
So let's take a look at some of the things you can do to improve finances.
Systematic Payments for Loans, Debts and Expenses
Do you have loans? Be it for the home, student learning or the medical expenses etc. You have to make a plan to pay them off.
Unless you pay them off they tend to increase in the time. And your salary and the earning ends up paying them as the time goes on.
In this type of the situations what you can do is start paying off the loans, debt and the expenses one by one. Pick the smallest one first and then go for the highest.
If your financial condition is good you can always go to do higher price first and then come to the lower. In some other conditions go with the priority to pay off the loans.
There are lot of spreadsheets, templates and the formulas you can try out for paying off the loans of various types out there.
Savings. Investments. Dividends.
The order in which you should save is different based on where you are financially. You should start by the emergency funds first and then start saving and then aim for investments.
Once you have 1 year worth of the emergency funds. Start saving for everyday expenses and then what's left of it you can put into the investments as time goes ahead.
You can invest into the mutual funds, stocks, crypto and the various investment options out there. Always calculate the time horizon, cost to dollar ratio and also amount of returns it can offer you.
Investing in crypto is also an option but make sure to risk your time and money wisely in crypto as overnight your investment can turn into dust.
Those who focus on the dividend income and the return income are the most comfortable in financial situation.
Emergency Fund
I have been writing about approaching the emergency fund in many ways. I have recently written an article which covers that part too. You can check that post here.
If you want to add the 1 year worth of the expenses to live, you should consider making the emergency funds your priority. You should calculate how much you need and how much total you would spend.
You can approach this in many ways. Like you can use crypto for emergency. In that case you would keep your funds with the stablecoins like FlexUSD, BUSD, TerraUST etc.
What you do and how you choose to build the emergency funds would vary based on your local conditions and you have to make changes keeping in mind the total expenses and savings and returns as well.
So find out what works for you and adjust the emergency funds calculation accordingly.
Create Financial Goal
Unless you have a strong goal. You are not going to work on the goal and then you won't be making much progress either. So it's better to have a financial goal and then you should work on that plan.
Like say I want to be financially independent before age of 45. You take the steps accordingly in order to reach that level.
You can also use the 25% formula that I used for crypto in the financial goals too. A lot of folks diversify using such formula. And it becomes easier to manage life with such financial goals.
Financial goals are complicated because what works for me may not work for you. And vice versa. A lot of changes are to be made as the world changes in it's mechanics.
What do you think?
This is my approach on how to achieve the financial planning and to improve the condition of any person financially. But that's just my perspective and I could be wrong.
So do let me know what you think of this approach towards finances.
I'd appreciate the comments :)