4 Easy Things to Do to Improve Your Finances

When people lost their jobs in 2020 because the pandemic forced many companies to layoff employees, many people were forced to rely on their credit cards to cover their basic expenses. They quickly racked up their debt when using high-interest credit cards because they did not have enough money coming in to keep up with their balances.

If you had to rely on high-interest credit cards to pay your expenses in 2020, you may still struggle to pay off your credit card debt, even though you have now found a job and have resumed regular payments. Fortunately, your situation is not as hopeless as you might feel, and there are plenty of personal finance strategies that you can use to get your finances back on track, such as consolidating your debt to pay off your credit cards, creating a budget to control your spending, and starting a side hustle to increase your income.

1. Consolidate Your Debts

One way to lower your high-interest credit card rates is to pay off all your credit cards with a consolidation loan. After you apply for a loan, you will lower your monthly payments, which will give you a chance to catch up on your debt.

It is cheaper to pay a consolidated loan than your credit cards for two reasons. The first is that you can pay over a longer period, which brings down your monthly payments. The second is that you will pay a fixed interest rate rather than a variable interest rate. The variable interest rate you were paying on your credit cards is often high because it’s tied to the market’s benchmark interest rates.

The monthly amount you pay on a consolidated loan will be based on an agreement that you make with the lender after you calculate how much you can afford to pay each month after calculating your current income and expenses. Since you will now pay an affordable amount regularly, your credit score will gradually improve.

  1. Control Your Spending 

If you find that you spend almost all your money every month but have little to show for it, it is not because you’re a spendthrift but because you did not have a system in place to plan where every dollar should go. Consequently, you spent money throughout the month on things like snacks, ATM fees, deal websites, upgraded shipping, and so on. Since they were such small amounts, you did not notice how they added up.

Although a budget may feel restrictive, it actually expands your financial freedom because you’ll now spend more money on the things that you need, and although keeping track of your money may feel stressful, it’s far more stressful not having the money that you need for something important.

A simple way to set up a budget is to use the 50-30-20 budgeting framework. Spend 50% of your income on your basic needs, 30% to cover your desires, and 20% on your savings and debts. Of course, these ratios are only an approximation. Depending on your income and expenses, you may have to adjust the percentages, but at least you have a framework for allocating your money.

Create your budget based on your after-tax income, and choose a budgeting tool—such as a notebook, an Excel spreadsheet, or a budgeting app—that you like to keep track of your spending.

You are unlikely to manage your money perfectly the first month you roll out your budget, but you will get increasingly better at it over time, making small adjustments to your spending habits each month.

  1. Choose Your Side Hustle

If you cannot earn enough from your regular job to cover all your expenses, you can still earn extra money without having to look for a new job by creating a side hustle.

Unlike getting a second part-time job, a side hustle will give you the flexibility to choose your schedule. A side hustle like walking dogs in your neighborhood, tutoring students, or selling digital services on freelance job boards can be a profitable way to increase your monthly income.

  1. Start An Emergency Savings

Thankfully, sites like Westernshamrock.com offer affordable solutions to people with bad credit in a jam. You can get several hundred dollars deposited into an account in a few days to handle unexpected emergencies. 

There are times when you need more than a short-term lender can provide. You might also run into a situation where you’re unable to repay the loan. That’s why it’s ideal to have an emergency savings fund. This not only gets you out of a jam fast, but it reduces your need to go into debt. The less debt you have the easier it is to improve your finances. 

The best way to implement these suggestions to improve your finances is to roll them out one at a time.