If your personal finances need reviving or if you’re not where you want to be financially, maybe it’s time for a money detox. Your money isn’t going to fix itself, so here’s a look at seven ways to improve your financial health.
See also: How to Keep Track of Personal Spending
1. Take Charge of Your Earnings
You can’t control how much your boss pays you, but you can take steps to stop living paycheck to paycheck. The secret is multiple income streams. If your job only provides enough income to pay your bills, look for other ways to earn money. If you can supplement with a part-time job or moonlight as a freelancer, you can generate cash to pay off debt, build a rainy day fund or plan for retirement.
2. Review Your Life Insurance
Nobody wants to think about death, but it’s an unfortunate part of life. Whether you’re single, married or you have children, get with a financial advisor and review your existing life insurance plan or purchase one. The death benefit can cover your funeral and burial, pay off your debts, and provide your family with financial support. Life insurance needs vary, but some experts recommend a policy that’s eight to ten times your annual income if you’re married or have dependents.
3. Get a Backup Plan
Life doesn’t always go according to plan – at least financially speaking. So, you need a backup plan. Getting a life insurance policy is an excellent start, but don’t stop there. Start building your rainy day fund by paying yourself first and saving ten percent of your earnings. Also, talk to your employer about disability insurance in case you’re unable to work temporarily due to an illness or injury, or purchase a policy on the private market.
4. Check for Fraud
Some people think identity theft can’t happen to them, but fraud is a real problem with long-term consequences. Order your credit report from AnnualCreditReport.com at least once a year, and make sure the information on your report is accurate. Also, check your bank account and credit card statements every few days for possible fraudulent activity.
5. Get Serious About Debt
Debt is like a black cloud hanging over your head. It can lower your credit score, and debt makes it harder to get loans. Pay more than your minimums every month and contact creditors to negotiate a lower interest rate. Stop using credit cards frivolously, and only use credit if you can afford to pay off a purchase each month.
6. Simplify Your Life
Having the biggest house and the best car on the block isn’t going to make you happy. If anything, it might create financial stress since you’ll have to work extra hard to maintain these possessions. Change your mindset and learn how to live on less. So what if you don’t have the biggest house? A cheaper house payment means you’ll have more disposable income for growing your cash cushion and enjoying life — and if you live simple, you might have the option of working less.
Whether it’s at home or at work, de-cluttering is freeing and clears your mind. Not only can you free up space in your house or office, your trash can become someone’s treasure, putting extra cash in your pocket. Take unwanted items to a consignment shop or have a yard side. Use the extra cash to pay off debt or build your emergency savings. As a rule of thumb, if you haven’t used an item in 12 to 18 months, get rid of it.
If you feel you’re losing control over your personal finances, stop complaining and do something about it. A financial detox is an excellent way to eliminate money stressors that weigh you down, and it can help you maintain a better grip on your money.
What financial moves are you planning to make this year?