Although making resolutions to improve your financial situation is a good thing to do at any time of year, many people find it easier at the beginning of a new year.
Regardless of when you begin planning your financial strategy, the basics remain the same so with that said, here are 10 key tips to getting ahead financially.
1. Get Paid What You're Worth and Spend Less Than You Earn
It may sound simple, but many people struggle with this first rule is to make sure you know what your job is worth in the marketplace, by conducting an evaluation of your skills, productivity, job tasks, contribution to the company, and the going rate, both inside and outside the company, for what you do. Being underpaid even a £1,000 a year can have a significant cumulative effect over the course of your working life.
No matter how much or how little you’re paid, you’ll never get ahead if you spend more than you earn. Often it’s easier to spend less than it is to earn more, and a little cost-cutting effort in a number of areas can result in savings. And, it doesn’t always have to involve making big sacrifices.
2. Stick to a Budget
An important step to consider when trying to get ahead financially is budgeting. After all, how can you know where your money is going if you don’t budget? How can you set spending and saving goals if you don’t know where your money is going? You need to set up a budget whether you make thousands or hundreds of thousands of dollars a year.
3. Pay off Credit Card Debt
Credit card debt is the number one obstacle to getting ahead financially because those little pieces of plastic are so convenient to use, and it’s so easy to forget that it’s real money we’re dealing with when we whip them out to pay for a purchase, large or small.
Despite our good resolves to pay the balance off quickly, the reality is that we often don’t, and end up paying far more for things than we would have paid if we had used cash. And that’s how thousands of us get into debt each year and how credit card companies make £millions in late payment charges!
4. Contribute to a Retirement Plan
In the UK, your employer now has to contribute to your retirement savings program, you should consider increasing your contributions toward it as and when you can afford to. Most employers will contribute/match the same amount that you put toward your account up to a certain percent – IF YOU HAVE STARTED – DO IT NOW!!
5. Have a Savings Plan
Okay, you’ve heard this before – pay yourself first, if you wait until you’ve met all of your other financial obligations before seeing what’s leftover for saving, chances are, you’ll never have a healthy savings account or investments. Resolve to set aside a minimum of 5% of your salary for savings before you start paying your bills or better or still, have money automatically deducted from your salary and deposited into a separate account.
If you’re contributing to a retirement plan and a savings account such as a credit union and you can still manage to put some money into other investments, all the better!
7. Maximise Your Employment Benefits
Employment benefits like a pension plan, flexible spending accounts, medical and dental insurance, etc., are worth big money. Make sure you’re maximising yours and taking advantage of the ones that can save you money by reducing taxes or out-of-pocket expenses.
8. Review Your Insurance Coverages
Too many people are talked into paying way too much for life insurance, whether it’s by adding these coverages to car loans, buying whole-life insurance policies when term-life makes more sense, or buying life insurance when you have no dependents.
On the other hand, it’s important that you have enough insurance to protect your dependents and your income in the case of death or disability.
9. Update Your Will
If you have dependents, no matter how little or how much you own, you need a will. If your situation isn’t too complicated, you can even do your own with software to better protect your loved ones, – consider writing a will.
10. Keep Good Records
If you’re not careful about keeping thorough financial records, you’re probably not claiming all your allowable income tax deductions and credits, especially if you are self_employed. Set up a system such as an excel spreadsheet of software now and use it all year. It’s much easier than scrambling to find everything when your account rings only to miss items that might have saved you money.
Final Thought ...
So now you have all this free info, how are you doing on the checklist? If you’re not doing at least six of the 10, consider resolving to make improvements. Choose one area at a time and set a goal for incorporating all 10 into your lifestyle.