In America, it seems like the majority of the country has a big spending problem. About 67% of the population doesn’t have $1000 in savings and 78% of the population is living paycheck to paycheck despite the average person earning $52,000 a year. Credit card debt has been steadily increasing every year and student loan debt is approaching $1.4 trillion. Despite these statistics, you and I have more opportunity than ever to go out into the marketplace and earn extra income. In this article, I’m going to break down simple money tips that can dramatically improve your financial situation. Let’s get started!
1. Set a budget.
Many Americans overlook how powerful a budget can be. If you are in any debt whatsoever, not setting a strict budget isn’t an option. The good news is that setting a budget is very straightforward and simple. All you have to do is find out what your net income is every month and what your expenses are each month. Then, assign a given amount of money to each expense every month. Some of these expenses will be fixed like rent and car payments while other will be variable like food and entertainment. In the end, it’s your goal to maximize income and minimize expenditures. This will ultimately allow you to climb out of debt faster which will put you in a healthy financial situation.
2. Increase Income
I touched on this subject in the previous section but I thought I’d cover it again because of its importance. One of the biggest predictors of wealth is your income. If you have no money to invest, you have no money to expand and grow. A good rule of thumb is to put at least 15% of your income into savings. However, your goal isn’t to keep this money in savings but to properly invest into stable investments that can earn you more money. The savings account should only be used as an account to store the money temporarily. There are multiple ways to earn an extra source of income these days. Some examples would be getting an extra job, starting a side hustle, freelancing online, and dog walking. No matter the source, extra income allows you to build wealth faster.
Overall, finances are a big part of our lives. It’s our duty to optimize our financial situation at every opportunity. If done right, you’ll build wealth and find yourself very well off.