5 tips on improving your personal finances.

Are you actively seeking ways of improving your personal finances? Being on top of your personal finances can be extremely rewarding. You start to understand the finest details of your income and expenditure, then you can proactively devise plans on how to keep more of your money. Now, let’s take a look at 5 key tips on improving your personal finances.

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1. Write everything down, literally.

It is only human nature that we tend to forget things but if it is written down, you can revert back to it at any point. As soon as I got my first job since leaving University, I was on a low salary but that did not stop me writing things down.

I started each month with a blank piece of paper and wrote down the money I expected to receive through my salary and also all the expenses I expected to incur that month. This included expenses such as my travel card, petrol and phone bills. Once you write things down, you begin to see exactly where your money is going, how much you will have left over at the end of the month and how much can go to your savings account.

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2. Cut out unnecessary expenses.

‍We all love a subscription or perhaps a free trial, then forgetting to cancel the free trial before we get charged. By following step one above, this allows you to see exactly how much you are spending on a particular expense. The next step is to ask yourself – “if I cut this expense out, will I be significantly worse off?” If the answer is ‘no’, then you should look at getting rid of the expense and banking the savings.

An expense I cut out in the early days was my music subscription. Yes, this was only about £15 per month but over the year this amounts to £180. I opted to listen to music on platforms where there was no cost to me. The savings begin to compound the more you ask yourself the question and the more you answer ‘no’.

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Improving your personal finances can be a daunting task. Especially if you spend exactly what you earn on a monthly basis. Some of the tips above may initially be difficult to grasp but I assure you, give the tips above a try for 6 to 12 months and you will be well on course to improving your personal finances.

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3. Use software to see into the future.

If you are software savvy then this is one for you. Above I mentioned writing everything down but if you can, go a step further and put it into software. Software allows you to see past 1 month, in fact it can let you see 12-18 months ahead by using software such as Microsoft Excel. Replicate tip 1 above 12 times to get an annual view of your personal finances.

As you begin adopting tip 2, you steadily begin improving your personal finances. Personally, I use Microsoft Excel and at any point in time, I am forecasting 24 months ahead. I am not saying for you to do the same, but for me, I like to see this level of detail and be proactive with any potential issues.

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4. Improve your earning potential, if you can.

It gets to a point where you have repeated tips 1 and 2 above and is now impossible to go any further. The next tip is to try and improve your earning potential. Do you have a skill that can be taught to others? Perhaps you have a hobby that can help to increase your earning potential? Whatever those might be, you can improve your earning potential by teaching someone else who is seeking to possess that skill.

By adding value and charging for your services to provide that learning, you begin to add more income into your income category and in turn that will improve your personal finances. I recall after my 2^nd job, I felt I wanted to increase my earning potential so rather than be comfortable with my low salary I began to research courses to increase my knowledge. It took me 3 years to become a Chartered Certified Accountant and I would not have been able to improve my earning potential without developing my skills and adding value to others.

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5. Try living frugally. ‍

To live frugally means to live below your means. Not to say that you are not already doing so but to remind you to carry on. It is really easy to forget this tip especially as your income grows and your expenses reduce. By living below your means, you are able to keep more of your money, grow your savings pot and also give back.

Now your income is on the rise, it is pretty tempting to splash out on urges. Doing so once in a while is healthy but if it becomes too frequent then you risk undoing all the hard work in the tips mentioned above. As my income grew over the years, it was tempting to buy things I wanted rather than needed. A way to reward myself for the hard work over the years was to buy myself a watch that I always wanted. Once that goal was accomplished, I returned to following the tips ironed out in this blog.

Improving your personal finances can be a daunting task. Especially if you spend exactly what you earn on a monthly basis. Some of the tips above may initially be difficult to grasp but I assure you, give the tips above a try for 6 to 12 months and you will be well on course to improving your personal finances.

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For more tips on Personal Finances, head over to our blog.

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