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Getting your financial act together can be a daunting task. If you are looking for some simple things you can do today to improve your finances, look no further. Getting better with money doesn’t have to be complex and difficult.
Today I will cover some basic steps you can take, and easy to use tools you can use to help you improve your finances
Where is your money going?
One of the most important improvements you can make with your finances is to really understand where you money is going, and make a plan for it.
Learning how to use a budget is the best way to get a better understanding of your finances.
There are lots of different budgeting styles, but we recommend a zero based budget to help improve your finances.
What is a Zero Based Budget?
A Zero Based Budget is a method of budgeting wherein you assign every dollar a role. That means there is no money that is unaccounted for in your budget or accounts. What you make equals what you budget for.
You might be thinking that you don’t want to spend everything you make. Here is the catch – you are not “Spending” everything you make, you are assigning it a role. That role might be to be spent, saved or invested, or it may even be to act as a buffer or cushion in your account incase you go over in a budget category.
This makes Zero Based Budgeting flexible and really helps you understand where your money is going. Resulting in you improving your finances!
How to make a Zero Based Budget
Luckily I have a few tools up my sleeve that can help you with this task. You do not have to start from scratch, there are lots of great templates for budgets out there, Whether you prefer to budget on paper or with spreadsheets!
You can think about the basic concept of a zero based budget in one of two ways.
Income – savings-spending = 0
Income = Savings + Spending
Get Debt Free
If you are carrying high interest debt like credit card debt, or auto loans, one thing you can do today to start improving your finances is to make a plan.
Paying off debt successfully starts with a plan, and an approach.
The two most common approaches are Debt Avalanche and Debt Snowball.
There are of course other approaches, but these are tried and true!
Debt Snowball is the method that can be the most motivating and easier to stick to, even though Debt Avalanche is the more logical one that will have you paying less in interest.
Our money behaviours are almost never logical, so you do you, choose the method that works for you.
Being able to map and plan out your payoff strategy can also be very motivating. Using a chart or spreadsheet to see your plan unfold can really help you stick to it!
Watch your progress
Once you start to improve your finances, you will be additionally motivated if you are watching your wealth grow as you do it!
You can do this by measuring and tracking your Net Worth.
What is Net Worth
Net Worth is one indicator of financial health that many people track.
Putting it simply…
Net Worth = What You Own – What You Owe.
Your Net Worth can be negative or positive. The important indicator is that over time it is becoming more positive as you pay off debt and build your savings and investments.
Using a tool to track and visualize your Net Worth can be a great motivator to keep your Finances moving in the right direction!
Find a tool that does it all
Wouldn’t it be great it you could utilize one set of tools that could help you accomplish all of these things?
Master Your Finances Digital Budgeting Bundle by Canadian Budget will help you improve your finances, learn to budget, get out of debt, and track your progress toward building wealth!