In order to improve your life, you will need to improve your money management. Think about your financial troubles and how your life could be different if your financial problems could all just magically disappear!

While several years of poor financial decision-making will definitely not go away in one day, when you start on the right track and stick to a good plan, your finances and life will turn around for the better.

These personal finance tips are a great starting point for significantly improving your financial situation.

1. SET CLEAR FINANCIAL GOALS

What is it you want to achieve financially? Do you want to pay off debt? How much debt do you want to pay off and by when? Your goals should be specific, and, time-bound!

Your financial goals can be broken down into daily, weekly, monthly, semi-annual, annual, or even longer time-frame milestones. Define your short-, medium-, and long-term goals. Depending on your level of discipline and the difficulty of what you plan to achieve, you may need to break some massive goals into smaller short-term goals so you can follow your progress and make it easier to stay on track.

2. CREATE A BUDGET

You need a budget to tell you where your money comes from and where it goes. While creating a financial goal is great, you won’t accomplish anything if you do not have money left at the end of each month. Take a close look at your income and expenses to determine if you have enough money left at the end of the month. If you do not, it is time to cut your expenses and also find ways to increase your income.

3. PAY OFF HIGH-INTEREST DEBT

To get yourself back on a sound financial footing, you need to put an end to high-interest debt i.e. credit card debt. The average credit card debt per U.S. household in 2018 was $8,431. In Canada, the average consumer non-mortgage debt stood at $22,800.

Plan to pay off your credit card obligations as soon as possible because every day that goes by on your outstanding balance (after the Grace Period has ended) means an increase in your debts. Start by making an extra payment every month – if you only make the minimum payments, your debts will stick around forever.

If you carry a large credit card balance, consider a low-interest balance-transfer card. Low-interest credit cards give you some relief from having the bulk of your payments go towards servicing interest payments instead of paying down your principal debt.

4. DIVERSIFY YOUR INCOME SOURCES

In the “battle of the budget,” you can win by cutting your expenses, increasing your income, or by doing both.

Let us take a look at some ways to increase your income. One option is to earn more at your current day job. You may be able to accomplish this by offering more at your job and negotiating a pay raise, or you may have to look for a better-paying job elsewhere.

Another option is to find alternative ways of supplementing your full-time salary with extra sources of income via a side hustle.

5. EARN CASH BACK ON YOUR PURCHASES

You should aim to earn cash back whenever you make a purchase online or in-store. And, why not? All the popular cash back apps are free to use and with offers as high as 30% in some cases, you could be leaving a significant amount of money on the table if you are not signed up.

6. CUT YOUR EXPENSES

Another important aspect of good money management is to cut your expenses. There are tons of ways to slash your monthly expenses and bills including:

Negotiate your bills so you pay less.
Eat out less.
Comparison shop for everything.
Cut your water and energy bills.
Cancel unwanted subscriptions.
Shop at a dollar store.
Stop paying unnecessary banking and investment fees.
Automate your bill payments.

7. AUTOMATE YOUR SAVINGS

It is easy to formulate a plan in your mind to save money this year. However, the reality is that most savings goals never really see the light of day. It is no wonder that 69% of Americans have less than $1,000 in their savings account, and on the Canadian side, the situation is no different.

One strategy for ensuring you meet your savings goals is to automate it using the “automated savings plan” feature that is popular with most savings accounts today. Automated savings mean that a specific amount of money leaves your chequing and is deposited into your savings account on a periodic basis.

Your finances will greatly improve when you get into the habit of “paying yourself first.” At least 10% (more is better) of your income should go into a savings or investment account.

8. START INVESTING

The sooner you start to invest, the better your chances of becoming financially-free. Time is literally money when it comes to building a great investment portfolio. Unless you are carrying credit card debt that needs to be paid off ASAP, you should be putting away money into an investment account regularly. Again, pay yourself first!

Max-out your contributions to tax-free or tax-deferred registered accounts, such as TFSA and RRSP. If your employer offers a contributions-match, maximize it so you don’t leave money on the table.

9. IMPROVE YOUR CREDIT SCORE

Credit monitoring helps you to quickly detect identity theft, fraud, and errors that can significantly damage your credit profile.

An excellent credit rating means you qualify for credit at competitive interest rates, thus saving you money. With Borrowell, you also get access to a free credit report that is updated every month along with your score, and at no charge to you. Applying to access your free credit score takes less than 5 minutes, so it’s not a big hassle.

10. TRY DIY

The internet has made it easier to find out how to do things yourself. You can visit Youtube or several other DIY websites for free tutorials, and start saving money. Some easy DIY tasks you can try today include:

Maintain your car.
Cut your own hair.
Cook your meals.
Tune-up your furnace and air conditioner.
Weatherstrip your home.
Revive your lawn.
Paint a room.
Repair leaky plumbing.
Replace light switches.
Restore your old deck.
Plant a vegetable garden.

11. EDUCATE YOURSELF

Increase your knowledge and improve your skills by continuously reading and learning. Investing in yourself is one of the most important investments you will ever make.

Through education, you may be able to: increase your income-earning ability, increase your capacity to provide solutions to real-life problems, broaden your general understanding and thinking ability, and feel fulfilled and satisfied with your life.

In the area of finances, there are many personal finance books you can read this year to increase your understanding of investing, debt management, budgeting, and more, including:

The Automatic Millionaire by David Bach: This is a clear guide on how to build wealth and financial freedom on any income.

I Will Teach You How To Be Rich by Ramit Sethi: A six-week program that shows millennials (20- to 35-year olds) how to master their money easily.

The Total Money Makeover by Dave Ramsey: This book shows you how to beat crushing debt!

The Little Book of Common Sense Investing by John Bogle: Written by the father of index investing, the book gives you insight into how simplified investing pays best.

The Richest Man in Babylon by George Clason: See how ancient financial truths still hold sway in today’s world.

12. DECLUTTER YOUR HOUSE

Organizing your home and getting rid of things you do not need will not only help you have more room to breathe fresher air, but it can also fatten your wallet.

Sell unused/not needed items using your local online marketplaces, Craigslist, Kijiji, Amazon, eBay, etc. Remember to not make purchases on impulse. When you have an urge to buy things, give yourself some days to mull it over and be certain it is really necessary.

Consider getting rid of one thing for every other item you buy. Use Decluttr to easily sell your unused CDs, DVDs, books and electronics.

Focus on quality over quantity. Why buy five variations of one thing if one quality well-made version can serve you just as well.

Cancel unused subscriptions.

13. STOP LIVING TO IMPRESS OTHERS

Do not spend money you don’t have to buy things you don’t need in order to impress your neighbours or your friends. The reality is that many people dig themselves into debt holes simply because they are not willing to dare to be different…to be real.

This year, impress yourself by setting financial goals, creating a budget, and accomplishing your goals.

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13 Steps to Improve Your Finances