Finances are a worry for many people. In the United States, for example, around 80% of adults are in debt. The average debt, not counting mortgage debt, is a painful $38,000. Whether you’re in debt or not, it’s understandable for you to be concerned about your finances.
The good news is that, not only is it possible to take control of your finances and reduce or even eliminate your debt, it’s also possible to make your assets work for you.
The Debt Issue
It’s common knowledge that you need to spend money to make money. So, it stands to reason that you should start with a healthy bank account before you can make it work for you. While your mortgage is a type of debt, you should focus on dealing with other, more pressing debts.
These include credit card debts, medical debts, and student loan debts. The first step is to get an accurate picture of your finances. This is vital for dealing with your debts and for getting the most out of your assets.
Once you know exactly what your debts are, what your income is, and what you generally spend per month, you can move on to improving your financial health. This typically has two halves. First, you want to reduce how much you spend. Second, you want to increase your income.
The simplest way to reduce your spending is to set a firm budget and stick to it, reducing any unnecessary expenses. However, it’s especially important to reduce your spending by getting rid of any debts that are draining your account.
While it’s tempting to only pay the minimum amount on your debts, the quickest way to get rid of them is to pay more to pay them off. Not only will this reduce the weight on your mind, but it will also save money as you aren’t spending so much time paying interest.
By paying off your debts one by one, you can focus on each one, in turn, eventually eliminating most of them, if not all of them. You can also consolidate your debts in one account, which makes it easier to arrange how you pay them off and may reduce your interest rate.
Smart Financial Decisions
Eliminating your debt is a brilliant start, as it can give you a blank slate to work with. Without any debt holding you back, you have the option to save up and even invest your money. You may be inclined to simply lock your money away or to spend it on whatever you fancy.
However, just because your debt situation is better, you shouldn’t stop using your money wisely. You can get expert, specific advice from Prio Wealth Management about how to prioritize your money, but the simple fact is that your money can be used for more than just everyday essentials.
With smart investments, you may be able to passively grow your income and assets so that you have a safety net to rely on. Even a pension like a 401(k) is better than letting your finances sit around. However, expert advice will guide you to specific solutions