Many Americans today face financial struggles, including affording food and medical care. In fact, a survey conducted by NPR in 2021 revealed that 40% of Americans face financial difficulties. In times like these, one might wonder how to get ahead financially. Is it even a possibility?
What does it mean to get ahead financially, anyway?
Before diving into it, let’s define what “getting ahead financially” means.
Getting ahead financially does not necessarily mean living a luxurious life. For some people, it can mean no longer living paycheck to paycheck, having a debt management plan and strategy in place, being able to afford things they need and want, and saving for the future.
It is easier and faster to get ahead financially if you already have large sums of money and investments. However, if you start from scratch, it starts by reducing your expenses to pay down debts, building an emergency fund, and getting started on investments.
How do you get ahead financially?
If you are stuck in the cycle of not having enough to save from every paycheck, which urges you to incur debt in financial emergencies, you’ve come to the right place. This article will list down ways to start making financial progress and getting ahead.
Have an honest financial health check
Before devising ways to get ahead in life financially, have a clear picture of where you are at present first. Be honest with yourself about how you are doing financially. List down the following:
- – Monthly income
- – Monthly recurring expenses
- – Balances on debts (personal loans, auto loans, etc.)
- – Balances on credit cards
- – Account balances in savings and checking accounts and in investments
What would be your priority? Is it building an emergency fund? Or is it paying off all debts? Or you may need to find another income stream. This honest financial health check is a good jump-off point for your plan to get ahead financially.
Set financial goals and milestones
To make your financial plan more achievable, ensure you can measure it. You can do this by setting milestones and goals. First, clearly identify what you want to achieve. For example, you wish to pay 50% of your debts in two years. Now you have a target amount of money to save. This way, your financial plan becomes more precise and specific. You can then adjust your lifestyle and spending habits to the milestones you want to achieve.
Up your budgeting game
Budgeting is more than just listing your monthly expenses against your income. It’s an art of constantly checking what works and what doesn’t and pinpointing problematic areas in your finances. With the financial goals and milestones in mind, find which part of your budget should be cut down to make room for more savings. Is it streaming apps — maybe it’s time to choose between Netflix and Disney+? When was the last time you checked whether you’re getting the most out of your current phone plan? Maybe it’s time for a downgrade. The small amounts saved from these cuts can pile up and help you pay off more debts or jumpstart your emergency fund.
Put dents in your debts
Chipping away at debt feels good. And a sure way to pay down debt quickly is to contribute more than the minimum amount required in your loan contracts. You can start by rounding up your monthly payments. Say your monthly amortization amounts to $155. You can round that up to $200. You’ll see the difference it could make in just a few months. However, note that some lenders set a maximum amount for monthly payments. Ask your bank or lending institution before making additional payments to avoid unnecessary penalties or fees. You can also use bonuses or tax refunds to pay down debts. Your future self will thank you for the sacrifice.
Believe and invest in yourself
If you want multiple income sources, it’s best to learn new skills. Take classes or read up on topics that will help you excel more in your field. If you are planning to invest in the stock market or dabble in cryptocurrency or Forex, take the time to learn the ropes from experts through free resources or paid training. Making yourself knowledgeable can ease any anxieties you may have when trying new things and taking significant steps.
Negotiate your salary
To some, negotiating salary increases can be uncomfortable. However, one way to get ahead in life is to have the courage to take what is yours. When offered a raise, negotiate to have it inched up a little higher. These little increases can compound over time. Know your accomplishments — have a detailed list of what you have achieved at work at a given time — and do not sell yourself short. It may not be the most comfortable conversation, but it will be worth it.
Take tax planning seriously
A lot of us dread the tax season. But with proper tax planning, you can save money and get larger tax refunds. Proper tax planning can help you sort out your personal finances and help you achieve the financial milestones you’ve set for yourself. For example, you can use your tax refunds to pay off debts. Plan ahead and organize your receipts to make tax time less stressful. You may also seek the help of CPAs to ensure you maximize your deductions and get all the tax refunds you are due.
Getting ahead financially may mean different things to everyone. Still, for most of us, it is more about getting out of debt, living comfortably, not being a sickness away from bankruptcy, and being able to save for the future. It may be difficult, but it is not impossible. Taking control of your finances is the first step; the list above contains ways to take it.
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