Money affects almost every single aspect of our lives. With money being so essential, you would think that we would spend more time trying to save it. However, we often find ourselves dedicating more time finding ways to spend it.
Knowing and understanding your budget is crucial to being and feeling financially stable. Which is an amazing feeling! Finding ways to increase your income and decrease your debt will allow you to feel that financial freedom. Answering the following questions can also help you prepare for large expenses such as buying a house or a new car.
1. What is my monthly budget?
If you don’t currently live by a monthly budget, you should. A good way to figure out what you should be spending each day is to use an app like Daily Budget, you can input regular income and expenses, saving goals and daily spends like coffee and it’ll tell you how much you have to live on. It’s great to stick to a budget.
2. How much debt do I have and how can I decrease the amount?
From student loans to credit card bills, put a number on your debt and try to factor in a way to repay it bit by bit. Forgetting about debts or putting them off until later can be dangerous, as some debts only grow the longer you leave them.
3. What is my credit score and how can I improve it?
There are lots of ways to check your credit score online, make sure you’re using a reputable website and don’t be afraid to get a couple of opinions. Your credit score is important, a good credit score gets you good insurance, interest rates, mortgage and renting deals and is important when applying for a credit card. So there’s always time to look into it.
4. Do I have at least three month’s worth of expenses in my savings account?
For most of us, the answer is no. Now is the time to collect that buffer, if something happens, an unexpected expense pops up or you need cash quickly, this will save you getting a loan. Don’t worry, though, you can easily save with the 50-20-30 rule.
5. What are some poor money habits I can get rid of?
We all have them, spending as soon as we get our paycheck, buying things we’ve only just seen as opposed to something we’ve wanted for a long time. Treating yourself is only natural, we all like a treat from time to time, but there are always areas of improvement. If you’ve found your account running on empty more often than not, perhaps you need to keep a closer eye on your account every week.
6. What do I want to save for in the coming year?
Plan a savings goal, a pair of Chloe boots, a trip, but plan to save a little more than is needed. Whether it’s something sensible like your own place or something spontaneous like a summer holiday, be careful and be frugal.
7. How can I increase my income?
Ok, so this might be a tough one. Is it time to ask for a raise? Do you have to work extra hard on your own business to make more money? Or is it time for a career change? If you want to increase your income, this could be the time to have the conversation with your manager.
8. Where do I want to be in one year’s time?
By December 2017 you’ll be in a position to evaluate your finances all over again, so what questions do you want to be asking yourself then? What do you want to have in your account, do you want to be the queen of savings? Do you want to have finally paid off your debts? New Year’s Resolutions are important, but don’t forget to set a money goal, too!
Answering these questions should ignite your critical thinking and get you on the right track to financial stability. Are these the only questions you should ask yourself? Absolutely not! However, it is a great start.
What are some other financial questions you may want to ask yourself?
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