Everyone worries about money. Whether you’re a business owner or you’re simply trying to stay afloat and manage your household finances, you likely understand the headaches involved when things go wrong. Even if your finances aren’t too concerning now, things can change very quickly.
The best way to make better decisions about your finances is to plan your choices in advance. Don’t make snap choices. Be proactive, not reactive. This way, you have more control over your financial situation.
The following tips and advice can help you with different types of financial decisions. There are differences between business finances and household finances, but you’d be surprised at how many principles stay the same.
So, here’s how to better manage your finances and hopefully build your wealth rather than lose it.
- Do a Financial Health Check
If you go to a doctor because you want to improve your health, they will have to perform a checkup. This will help them diagnose any illnesses and spot any potential issues with your health. The same applies to your finances. You can work out how to fix or improve your finances if you don’t know what they look like.
Check your bank statements going back at least six months, and ideally a year. This is like your medical history. This will provide a clear picture of your average financial health, including regular bills and payments, and also factoring in any unusual and large expenses throughout the year.
Work out your income and expenses and whether you’re earning more or less than you spend on average. As you’d expect, the latter option is not good, but you can still be in trouble if you’re technically earning more.
Look at regular expenses, including outstanding loans, bills, and any subscriptions that drain your financial resources.
Check your saving patterns, if you have any.
- Get Professional Help
Sometimes the best solution to complicated money concerns is to hire a professional accountant. An accountant is especially helpful when you’re running a business. The important thing is to make sure you hire the right accountant for the job.
For example, if you find it difficult to fill out tax returns and get any benefits that are available, a tax accountant would be ideal. They can ensure that your taxes are filled out correctly and that any grants or governmental help you’re entitled to are applied for. This can save you a lot of money in the long run.
There is a difference between personal and business accountants. But in both respects, an accountant can help you to build your wealth and your assets. Personal accountants can deal with investments, and some financial advisors and experts can help you get out of difficult financial situations.
You should also hire professionals when the legal system is involved. For example, if you’re the executor of a will, an attorney will help you navigate the financial side of things.
- Create a Budget
When it comes to improving your financial situation, you can’t go wrong with a budget. A budget helps you to curtail your expenses and get the most out of the money you have.
Work out priorities first. What are your essential expenses and bills? This might include rent or a mortgage, utilities, food, health insurance, education, travel expenses, and any outstanding debts or loans.
What other expenses do you have? Regular spending like subscriptions can play a role in your budget. You should also consider entertainment, holidays, clothing, and other expenses that you might survive without, but that are important to your lifestyle.
Allocate an appropriate amount for each part of your budget. Ideally, you should include paying off debts and adding to your savings, so you’re constantly building up rather than just living hand to mouth.
- Cutting Costs, Boosting Profits
As you create your budget, you might come across opportunities to cut your costs.
In personal and business dealings, cutting costs and boosting your profits or income are very important. But it’s not always easy.
Look for non-essential, regular costs and weigh up how important they are. You might need to make sacrifices in the short or long term to have a realistic budget. This could mean downsizing, switching from private education, or making other major changes.
On the other side of the coin, boosting your profits or income gives you more money to play with. Look for different opportunities to make more money. A better job is a handy idea, but not always feasible. A side hustle might provide a little extra to pad out your budget.
Sometimes, you need to spend more to make more. Education can open you up for better job opportunities later in life. Or you might be able to invest your funds.
- Eliminating Debt
Debt is a massive drain on your resources and a huge stress. Ideally, the sooner you can pay off your debt, the better it’ll be.
Rather than paying the minimum amount on everything, consider different options. Consolidating multiple debts into a single larger, low interest loan will make it easier for you to pay off the debt and save on interest.
Another way is to focus on certain debts that you can pay off quickly and eliminate them one-by-one.
No matter the method, look for a solution and fast.
- Save or Invest?
If you have any debts, the answer is to pay them off first. Then you can focus on saving or investing.
Investing your money has more risk, but you will potentially earn a lot more money than if you save it and lock it away. Look into different investment opportunities so you can have a diverse portfolio. This way, you should make money somewhere.
Use tools like a cryptocurrency exchange to make sure you get the most out of your money and always research before investing. This way, you reduce your risk of losing your money. There is always a risk, but you can cut it down and potentially earn a lot more.
