How to Improve Personal Finances

It is so much easier to make of a mess of your personal finances than it is to improve them. Starting out, these steps are not simple by any means, but once you have a strong grip on your improved finances, managing your money will be easy.

Things You'll Need

• notebook
• color highlighter
• calculator
• pencil

Instructions

How To Improve Personal Finances

1. Add up your cost of living. Buy a notebook and keep it in a safe place. Inside the notebook's cover, write the date and your monthly income. Below your income, make a list of all of your bills plus your regular cost of living expenses (fuel, groceries, personal care,etc.) If your expenses exceed your income, highlight the extra expenses that can be eliminated.

2. Track spending. In the notebook, write down every expense that you spend money on everyday. This can become a time consuming process, so stay on top of things on a daily basis. Save all of your receipts and journal them into your notebook. At the bottom of every page, total the amount spent. This will give you an eye opening example of your daily spending habits. On the days that you pay your bills, include those payments on the page as well. This is possibly the most important step in the process of improving your personal finances.

3. Shop around. You cannot eliminate buying food, but you can change your habits in the way that you buy the food. If you are shopping at the most prestigious grocery store in your town, stop going there now. Scan the local newspaper for sales and coupons. Take a look at how much you are paying for your favorite foods, and shop around town for better prices. Some grocery stores have shopper's reward cards that will add up to a tremendous savings in just a few shopping trips. If you drive a vehicle, shop around for the cheapest gas stations, even if it is a penny or two cheaper, it is worth the savings.

4. Minimize. If you are a compulsive shopper or an impulsive shopper, you must ask yourself a very important question : "Can I live without it?" If the answer is yes, then move along. If you have certain routines that cost extra money such as eating out often, going to the gym or having your hair or nails done, plan on eliminating those expenses temporarily. The idea is to improve your personal finances, by doing so, you must make changes in your lifestyle.

5. Eliminate debt. Take a look at the list that you made on the cover of the notebook and notice the amount of debt. From the smallest to the largest amount, number the debts with number one being the smallest. While making minimum payments on all other bills, concentrate on paying the smallest debt off first. As you eliminate your little debts one at a time, take the money that you were paying and apply it to the next debt in line.

6. Start a savings. Your savings does not have to be in a bank. Work hard on saving literally every penny that is available until you have at least $300. To give you a jump start on a savings stash, come up with "free money" by having a yard sale or maybe a temporary part-time job. In order to improve your personal finances, you must have a back-up plan in case the unexpected happens.

7. Maintain your changes. It will take several months to get on track with your new and improved financial plan, but once you do, it will be easy to understand the importance of being a good steward of your money. As time goes by and you eliminate more and more of the debt that kept eating your income, you will have more to spend on the "little luxuries" that you once enjoyed. In some situations, you may learn that the things that were once so important to you, may not be as important now that you have a strong grip on your financial situation.