Money Makeover: 5 Ways to Change Your Finances in Just 1 Year
You can significantly change your financial situation in one year with a money makeover. You can do a lot in one year; I have experienced dramatic changes from one year to the next. That can be you as well.
I wanted to zero in on the big-ticket things you can do this year to help your finances. I have just five things that I'm going to focus on.
1. Budget and track your money
The very first thing you'll need to do is to start budgeting and tracking. Nothing will change if you're unaware of where your money is going and are not making a plan for yourself.
I believe tracking is a huge thing for changing your financial situation. Tracking is going back and looking at your spending because you're probably underestimating what you're paying for. If you're not paying attention to where your money is going, it's very easy to lose track of it.
Then, of course, there's budgeting. I think budgeting should be done every single month. Some people choose to do it every couple of weeks along with their paychecks, but I say at least every month because every month will look a little bit different.
Budgeting does not need to be complicated. You'll first want to start with your income, how much you expect to make in the month, and then how much of that money will be spent on each category in your life. You have to pay for rent; you have to pay your utility bills, you have to pay for groceries, you have to pay for your pets or your children, and any other things that you can list.
You can make room for paying off debt, saving, or investing within that budget. If you're doing all three of those things or one or two of those things, that will make a big difference in your net worth and your financial situation.
2. Transition careers
This is something that I did in 2022. This was not unique to me at that time. You can switch careers and make higher pay depending on your current career. You could potentially cut out a commute. If you end up working remotely, you may have more flexibility and better benefits. All these things add up and will significantly change your financial situation over the year.
Of course, you'll still need to put in the work. Transitioning careers in general, no matter which career you end up going to, can significantly boost your financial situation because you may be low-income or in a job that you're unhappy with. Time is always passing, so you might as well try to do something, whatever you want to go after.
3. Cut expenses and negotiate your bills
First, you can switch to a lower plan for your phone plan. Your auto insurance or any type of insurance can be lowered. You can shop around to see if you can get a better rate with a different provider. If you have any medical bills, be sure to call and ask for a discount or if there's any relief. If you are low-income, you can get that medical bill lowered. I did this several times when I was younger and had a much lower income.
If you have credit card debt, definitely call your credit card companies and ask if they have a lower interest rate that they can offer. Now is a little bit of an iffy time, but it's still worth the call, in my opinion. Check on any subscriptions that you may have. Are there things that you do not need? You can cut those out of your budget—the same thing with cable or other streaming services.
Negotiate lower bills if you can. This is a big thing because if you're paying $100 for your phone bill and you end up switching and paying $30 per month or less, you save hundreds of dollars a year.
If you tie everything all together, like your phone bill and subscriptions, and you start to add up the savings, it's potentially thousands of dollars in a year. Those thousands of dollars can be used toward your debt, savings, investments, and other financial goals.
4. Work with a financial coach
Number four is to work with a financial coach. I offer financial coaching primarily with a focus on getting out of debt. I've been doing it since 2020, and I love it. I have worked with clients short-term and long-term, and I have seen significant changes in their finances.
Typically, all you need is some clarification, a plan, and somebody to hold you accountable.
5. Start a side hustle
The final thing on this list is to start a side hustle. I know that not everybody is into side hustles or wants to do side hustles, and that's perfectly fine.
However, if you've been thinking about it, or you've been wanting to start a side hustle, bought the stuff for it, or already did some research on it, go ahead and just get started. The reason I included this on this list is that it really can make a big difference. I know for myself that starting side hustles has significantly changed my life.
You can get creative with how you earn your money. As time goes on, you can get more strategic, gain more momentum, and increase your income. Don't get stuck in the research.
Don't get stuck in the how-to or what-if. Just go ahead and make a plan and get started with it because time is passing, and within a year, you could see a significant difference between where you are today and where you will be then.
Those are my five major tips to do a financial makeover and change your life in one year. Get started, stick to your plan, and you'll improve your finances. If you plan on doing any of these things, please comment below and let us know how things are going.
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