5 Ways To Positively Impact Your Financial Position

Mature couple doing family finances at homeWe all want to strengthen our financial position. Regardless of your current situation, we all strive to improve our finances. If you think about it, we were prepared for this task even as kids. Why do you think we are taught to save in our piggy banks? Because we need to learn the value of saving so we can avoid debt.

Why do you think you had to do house chores before you received your allowance for the week? Because you had to learn that money doesn’t grow on trees or that they do not magically appear in your parent’s wallets. This is also one way your parents taught you finances. The automated teller machines or ATMs doesn’t dispense money at will. You need to work hard in exchange for those funds.

Why do you think we are required to go to school? So we can graduate and qualify to work in a high-paying position in order to have the finances to pay for our needs. This is usually what’s at the back of your minds when you pursue higher education especially that several surveys have proven that college graduates really has an edge with the salary level.

Although there are a lot of lessons learned that are influential who we will become as adults, one of the most important qualities that we need to develop is our ability to manage our finances. Once we understand how to use financial management to our advantage, we can always rise from any monetary situation. We will always know how to bounce back and improve our financial position especially if this will help you stay away from the average credit card debt of about $15,000 according to Nerdwallet.com.

5 different ways that you can improve your financial situation

There are many ways that you can improve your current financial standing. However, all of them have the same bottom line – you need to free up some money so you can afford to invest it to open other sources of income. Whether you choose to cut back on spending or you decide to earn more, that is besides the point. What you want to happen is to force yourself to save a portion of your cash inflow so you can use it as capital to take your financial position to the next level.

To give you something to start with, here are 5 ways that you can improve your current financial situation.

  • Avoiding waste. This is one sure way of helping you improve your cash flow and put some balance in your household budget as well as get closer to financial security. This is especially helpful when you are having a hard time making ends meet. When you get to that situation, you either increase your income and/or lower down your expenses and the latter is easier than getting in more funds into the budget. You need to sit down and take a long hard look at your expenses and identify the ones that you can cut down without too much sacrifice on your lifestyle. If terminating your magazine subscriptions would not hurt then go ahead and discontinue them. You might just be viewing a few favorite channels so call cable provider and check your options of downgrading a plan. You can even brew your own coffee in the morning to stay away from those signature coffees that will set you back hundreds of dollars when you add up the expense in a year’s time.
  • Downsizing your house. When you are looking at improving your financial position, one of the most extreme steps that you can take is to downgrade your house and choose to live in a smaller one just like how Time.com explained. This is a decision that is more prominent with older consumers because they are looking to save on cost as they get older. But you can also consider this to help you save on rent or mortgage payment. But you need to consider and account for miscellaneous expenses that comes with transferring to a new house so you are not caught off-guard.
  • Automating your savings. You need to save money for multiple future need such as retirement or for your children’s college fund. To do this, you need to set aside a certain portion of your monthly pay to make sure that you are able to increase that amount as you go along. One of the easiest way to execute this is to automate your savings. Even before you see your money in your account and have ideas of material possessions you want to buy, have your bank automatically transfer a certain amount to another account. This ensures that you do not spend them all in one go and helps you reach your financial objective. This is also possible with employers where they take your 401(k) contribution off the top before transferring your pay.
  • Decluttering your life. This can apply both to physical items and even detrimental habits. If you have more bread toasters than you need, you might want to consider selling some of them to earn extra money and declutter your kitchen. If you love to drink until you pass out then it might be a good idea to quit drinking. Not only does it help you save a few dollars but it contributes to a healthier lifestyle. That can save you a lot more as it can help prevent unexpected hospital visits and even the purchase of medicines.
  • Investing for your future. This can differ to a lot of people depending on their age and status in life. If you are still young, you might want to pursue a college education as a way of investing for your future. If you already graduated from college, investing in yourself can can be post-graduate studies. If you are already working, you might define this investment as saving for your retirement fund which you can use in the future. Whatever it may be, remember that you need to have a plan in place for your future self.

Getting derailed from your financial plans

You cannot take away the misfortunes in life and there are sometimes no way of of preventing these unfortunate experiences from happening. But there are small mistakes that you are doing that is contributing to those problems. Here are a few of them and it is important to take note of these situations so you can prepare for them accordingly.

  • Getting too much debt. You need to be able to monitor your manage your debt level and have a proactive stance in dealing with them. You don’t just shrug off your shoulders and take debt month in and month out. You need to have systems and safeguards in place to let you know how debt that you accumulated is already affecting your financial goals.
  • Not having a budget. This is just unacceptable when you are trying to improve your financial position. First off, you would not be able to benchmark whatever improvement or deterioration you might have with the way you handle your finances. You need to have a list of what is coming in and out so you can plan for the long run. USNews.com even shared some ways to get started with budgeting.
  • Setting unrealistic financial guidelines. When you set lofty goals that are just too hard to reach, it can lead to too much disappointment that can frustrate and lead you to splurge – much like eating too much after a crash diet. Be realistic with your goals and adjust them accordingly as you go along.
  • Not having reserve funds. You need to have an adequate amount of emergency fund and rainy day fund to offset any unexpected expenses along the way. Getting caught off-guard and not having any funds to manage an emergency can really get you in the red and derail your financial plans.

There are a lot of ways to improve your financial position and you should not take it for granted. The better your finances are, the more poised you are of reaching your goals and objectives.