Making ends meet might make you feel financially stable, but it probably doesn’t make you feel financially comfortable. So many people focus simply on paying their bills and setting aside enough money for important expenses, but they don’t necessarily give themselves any breathing room when it comes to their money. Perhaps you fall into that category. You have enough money for food, rent (or mortgage payments), petrol, and other necessities, but you don’t set aside enough money for luxuries in life. Perhaps you don’t even set aside enough money for the future, and that’s a necessity, in many ways. If you want to finally achieve the dream of being financially comfortable then these pointers could give you some ideas that will steer you in the right direction.
Learn to manage your expenses responsibly.
The first step to achieving financial comfort is to learn how to manage your expense responsibly. So many money problems start with bad spending habits. You might be earning a fair salary but squandering your income on unnecessary things. And this doesn’t necessarily stop at non-essential expenses. You might be spending more money on essential expenses than is necessary. And this doesn’t mean you should cut corners in order to manage your expenses more responsibly, but you could definitely be saving money in ways that you might not realise. For instance, you could save money on groceries by looking for coupons before you check out your basket online (or before you walk into a store). There’s a lot of money to be saved with a quick Google search. You could also save money on electricity at home by insulating your windows (to conserve heat) and getting energy-efficient appliances.
You should also learn to manage your non-essential expenses, of course. You don’t have to give up on luxuries in order to be financially comfortable. Obviously, the goal of being financially comfortable is that you’ll be able to afford such luxuries. But you need to get your priorities right. If you want to have more money for nice meals out or trips to the cinema then you should take a look at your luxury spending habits to see if you could save money in other areas. If you make a lot of purchases that you regret then you should try the one-month technique. If you see something you want, whether it’s an expensive jacket or a fancy new tablet, then tell yourself that you’ll buy it in a month. In many cases, you’ll find that you’ve lost interest within the week. That way, you’ll have saved money you can put towards luxuries you really want.
Use financial resources.
In this digital age, there are plenty of financial management tools you should be using, both online and offline. There are apps you can use to help you manage your budget and ensure that you’re sticking to your spending limits. This might be particularly useful if you’re struggling to follow the suggestions mentioned in the first point of this article. If you can’t trust yourself to think mathematically then financial tools can be very helpful in this regard. Do some research to see which resources have the best reviews, and try out a few different ones until you find something that works for you and your lifestyle. Don’t become too dependent on technology to look after your finances for you; just use it as a form of backup when you’re struggling to keep up with your ingoings and outgoings.
Try to improve your credit score.
If you want to be financially comfortable then you should also try to improve your credit score. You might feel as if you’re not ready to buy a house or even a new car because you’ve not got the necessary financial backing, but that’s why so many people take out loans to cover the down deposits on such costly things. And, in order to qualify for that, you need to work on your credit rating. Lenders like to give good loans with fair interest rates to borrowers who display a history of being trustworthy. You should regularly check your credit files to make sure they’re accurate; incorrect information could ruin your overall rating and your ability to get the loans you need in life.
To start building up a good financial history, you need to develop a healthy relationship with debt. It’s a word with many negative connotations, but it doesn’t have to be a negative thing if you can manage it effectively. For instance, paying back your student loans on time (for university) will help to improve your credit rating. Using credit cards responsibly will help too (i.e. don’t exceed your spending limit). Of course, if you’re struggling to borrow money to improve your credit score then you might want to do some research to find out options for people who lack the necessary credit history for a specific loan. Good debt is something that shouldn’t be avoided; as long as you can easily make the repayments on a loan, it’ll be great for your credit score. And that’ll help you in the future. It’ll mean you can borrow the money necessary for big purchases, such as a house. Financial comfort is about being able to afford the necessities in life, even if you have to pay for them gradually.
The final step to achieving the dream of being financially comfortable is to save money constantly. If you want to make sure that you never have to worry about your personal finances then you need to adopt a long-term perspective with your money. You need to start thinking about your retirement or any money that your children might need for university and their futures. Building up some savings will ensure that you have the necessary wealth and financial backing to cover the costs of tomorrow. Make sure you set aside a small amount of your income (maybe 20% or so) on a monthly basis so that your savings start to grow substantially.