I meet a lot of "ostriches" - people who keep their heads in the sand when it comes to personal finance.
Heck, I was one of them until I got so sick of ignoring my problem and pretending everything would turn out ok.
I see you nodding, my friend!
You know the oldie: "What you don't know can't hurt you," correct? Well, I am sorry to break it to you; that is precisely the opposite in the world of personal finances. What you don't know hurts you and will haunt you for the rest of your life unless you do something about it.
If phrases like "I don't even know where to start," "I know nothing about personal finances," or "Personal finances are messy and complicated," then this post might be a good starting point for you. Remember, it's never too late to start, and every step you take today brings you closer to a brighter financial future.
Achieving financial stability and growth is a journey that begins with small, actionable steps. For artists and creatives, managing finances effectively can be especially crucial.
Once you take control of your finances, you will take control of your life!
Here are four things you can do today to improve your finances:
1. Determine Your Net Worth and Savings Rate
Understanding your financial health starts with knowing where you stand. Calculate your net worth by subtracting your liabilities (debts) from your assets (savings, investments, property). This figure gives you a clear snapshot of your current financial situation.
Next, assess your savings rate, which is the percentage of your income that you save each month. Aim to save at least 20% of your income to build a robust financial cushion.
2. Review Your Recurring Subscriptions
Many underestimate the impact of recurring subscriptions and unexpected expenses on our finances. Take time today to audit your subscriptions—from streaming services to gym memberships. Cancel any that you no longer use or need. Also, identify surprise payments such as annual fees, maintenance costs, or irregular bills that can sneak up on your budget. Being aware of these expenses helps you allocate funds more effectively.
3. Calculate Your Annual Spending
To gain better control over your finances, track your spending meticulously. Start by calculating your annual spending across different categories like housing, groceries, entertainment, and utilities. This exercise helps you see where your money goes and identifies areas where you can cut back or optimize. Alternatively, if you're not tracking expenses, start today by using apps or spreadsheets to record every expenditure. This habit fosters awareness and mindful spending.
And for the end, your best friend for building wealth:
4. Automate Your Finances
Simplify your financial management by automating routine tasks. Set up autopay for bills, credit card payments, and contributions to savings or investment accounts. Automating ensures you never miss payments, avoid late fees, and effortlessly stay on track with your financial goals. Consider automating investments, such as setting up regular retirement or brokerage account transfers. This practice ensures consistency in building wealth over time.
Final advice: START SMALL - STAY CONSISTENT!
What steps will you take today to start improving your financial future? Let me know in the comments!
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