9 Things That Can Solve 80% of Money Problems
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Money problems can be a major source of stress and anxiety for many people. Whether it’s struggling to pay bills, dealing with debt, or just feeling like you never have enough money, financial issues can have a serious impact on your well-being. However, the good news is that many money problems can be solved with some simple strategies and a bit of effort. So here’s a look at 9 things that can solve 80% of money problems.
1. Create a budget
A budget is a plan that helps you manage your income and expenses. Start by listing all of your income sources and fixed expenses such as rent, utilities, and car payments. Next, calculate your variable expenses such as groceries, entertainment, and clothing. Review your bank statements for the previous two or three months to get a clear picture of how much you spend in these areas (on average).
Once you have an idea of your income and expenses, make adjustments. Based on how much you have left after paying “needs,” determine a reasonable amount to spend on extras or wants, and don’t forget to set money aside for savings and debt repayment.
Here’s a video on how to create a budget that you won’t hate.
2. Build an emergency fund
Life is unpredictable and unexpected expenses can wreak havoc on your finances. Start building an emergency fund by setting aside a portion of your income each month. Aim for at least three to six months’ worth of living expenses. If you don’t have a lot of extra money, start small and set aside a small portion of your income each week or month – $10 or $20 a week can add up over time.
You can also save “surprise” money or windfalls. For example, save your work bonus or tax refund. And if you’re paid hourly or weekly, save your “fifth-week” paychecks. Some months have an extra week, which means extra cash on your paycheck.
As a side note, one of the best places for your emergency fund is an online high-yield savings account. These accounts earn a higher rate compared to a regular savings, so you’re able to grow your money faster.
3. Pay off high-interest debt
You can focus on the debt with the lowest balance first to enjoy a quick win – which can build momentum. Or, make a plan to pay off your highest interest debt first. To pay off balances faster, stop using your credit cards and make higher payments. Additionally, negotiate your credit card rates. By doing so, more of your payments go toward reducing the principal balance. Here’s a script on how to ask for a better credit card rate.
4. Avoid new debt
Avoid taking on new debt, such as loans or credit cards, unless it’s absolutely necessary. If you need to apply for a loan, make sure you can afford the monthly payments and shop around to get the lowest interest rate. If possible, accelerate debt payments to get rid of balances as soon as possible.
5. Cut unnecessary expenses
Take a close look at your expenses and identify any unnecessary spending. Cut back on things like dining out, subscription services, and other non-essential purchases. You don’t have to deprive yourself, but a little moderation goes a long way. So instead of eating out for lunch five days a week, limit these outings to one or two times a week.
6. Increase your income
Look for ways to increase your income, such as taking on a side hustle or asking for a raise at work. Consider selling items you no longer need or renting out a spare room in your home.
7. Negotiate bills
Don’t be afraid to negotiate bills such as cable, internet, and cell phone plans. Many providers are willing to offer discounts or promotions to keep you as a customer.
8. Shop around
Comparison shop for major purchases, such as appliances, electronics, and cars. Look for deals and discounts, and ask yourself this question before buying anything: Is this the best price? If you don’t know the answer, that means you haven’t shopped around enough.
9. Invest in yourself
Invest in your education and skills to increase your earning potential. Consider taking courses or certifications to boost your resume and qualify for higher-paying jobs.
What would be your #10? Let me know in the comments!