The Complete Guide to Improving Your Finances

Imagine getting to spend more time with your family and friends without feeling guilty. Imagine going on a holiday without stressing about being unable to afford it. Imagine having saving money so well, you’ll no longer need to work another day (if you decide not to). The amount of stress our current financial situation brings could be overwhelming right now. But the moment we decide to work on improving and achieving our goals and follow these four steps, we can soon find ourselves focusing on the things that matter more.  

Here are four steps to improve your financial situation:

Step 1: Write down your financial goals

These financial goals will act as your guide. Without a clear goal, it will be harder to improve our savings or get out of the paycheck to paycheck cycle. Let’s say our main goal is to break the paycheck to paycheck cycle. We can break this main goal into subgoals, such as getting out of debt or building an emergency fund. By creating these subgoals, it’s easier to reach the main goal. 

When we write our goals down, we need to make them SMART: Specific, Measurable, Achievable, Realistic, and Timely. Here are some examples of SMART goals:

  • By 11 December 2019, I will be free of debt, paying $500 every month, starting 11 July 2019.
  • By 11 November 2019, I will have $3000 saved for my holiday, by saving $500 every month, starting 11 June 2019.

These examples show exactly what we want to happen, how we can measure it, and when it will be achieved. You can find the complete guide on creating SMART goals here.

Step 2: Create your budget

Once we’ve created our goals, the next step is to come up with a budget plan. Now this step can be dreadful, but if we only take a few minutes to create our budget plan, we’d be a step closer to finally reaching our financial goals. Budgeting is as easy as eating cake.

When we serve cake at a birthday party, we would ideally split the cake into slices based on what our guests want. That’s how budgeting works, except instead of giving slices of our income to our guests, they go to our expenses. Some recurring expenses will require a bigger chunk of our cake, while others will only require a small bit. 

Here’s a list of what you could include in your budget:

  • Rent/Mortgage
  • Phone & Internet Bill
  • Electricity, Water, Gas bills
  • Subscriptions (Netflix, FOXTEL, Stan, Spotify, etc.)
  • Transportation Allowance (public transport tickets or petrol for your car)
  • Debt repayments
  • Groceries
  • Emergency Funds
  • Savings
  • Entertainment & Eating Out

Just like our birthday cake, when the money has been allocated to the different bills and expenses, there’s a chance we’ll be left with a little bit of our income. Ideally, we’d put this into our savings. If we want to get rid of our debt right away, then we can put the money towards that. But if debt payments and savings are already part of your budget, then you can use this money as your disposable income, so you can buy whatever you want. 

Check out our full guide on proper budgeting here

Step 3: Track your expenses

After creating our budget, tracking our expenses is where the real work happens. Tracking our expenses allows us to see where our money goes. Sure we’ve got our budget ready and we know how to allocate our money, but as humans, we have the tendency to splurge a little bit. Sometimes, we also fall into the traps of marketing, causing us to overspend. We also tend to be habitual when it comes to our expenses, and these are some of the things we may be unaware of.

Check out our full guide on tracking expenses here.

Tracking our expenses could be a lot of work. But don’t be discouraged. Financial tools, such as Frollo, exist to help make this task easier. 

When we get full control of our spending habits and our expenses, we can put the extra moneey towards building our savings or debt repayments so we can finally become financially stress-free.

Step 4: Boost your savings (and put them towards your debt/loan repayments)

When we track our expenses, these spending habits we’re unaware of come to light. With these, we can achieve our financial goals faster if we boost our savings by changing these behaviours. 

For instance, we may not be aware that we spend $4.10 for a cup of coffee every day. Perhaps we’ve just gotten so used to it. But spending $4.10/day means $120 in a month. If we could find alternatives to buying coffee, say bringing coffee from home instead, then we could surely save more money.

Another example would be eating lunch out every day. Lunches could cost up to $10 or more every day. That’s $50/week or $200 a month. If we choose to bring lunch with us half of the time, then we could be saving $100 a month, which we could use to build our emergency fund or pay off our debt. 

There are a lot of other ways we could boost our savings. What’s important is that we turn these into smaller goals where we can experience small wins, gratifying us and validating that we’re on the right track. 

View our guide on how you can boost your savings through small wins here.

Reaching your financial goals is easier once you get started

To make it easier, Frollo is a helpful tool if you want to get out of the paycheck to paycheck cycle. It will help you create your goals, setup your budget, track your expenses, and win challenges to boost your savings. Frollo also offers insights on your spending habits so you can immediately see where your money’s going. By making the most out of these features, we can surely improve our financial situation in no time.

Now go on, and take the first step.

Got money-saving tips? Share them with us in the comment section below!

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Frollo is a purpose-driven Australian FinTech on a quest to help people feel good about money. We’ve built the simplest way to help people get their finances on track – and through our business ecosystem, we’re supporting our enterprise clients to do the same for their customers.

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