1. Know your expenditure

You already know how much money you receive in your income, but what about your expenses? It’s time to note down your expenses too. It is advised to do this on a monthly basis if you want to trim down your spending to a great extent and at least once in three months if you are lackadaisical.

For this, you can make use of an online tool such as LearnVest, BillGuard, or Mint or even you can do it on an excel sheet. I use Google Sheets for this, since I can access it from anywhere, my home, office, or even from a café. Plus, you can also share your Google docs with someone else too like your partner. Noting down your expenses is the first step towards accelerating your net worth.

2. Scrutinize your costs/expenses

Now that you have figured out how much you really spend in a month or quarterly, you need to find out the biggest expenses within these. These may include your rent, the installment of your house or car loan, etc. Plus, there would be some automatic payments, which are directly deducted from your salary account. You need to count these too in your expenses. At the end of this step, you will know what are your major expenses and how much you spend on these in a month or quarter.

3. Identify the problems

Now, you must take some steps to lower your biggest expenses. For instance, you can refinance your mortgage, try to renegotiate your lease, hunt for a new flat, etc. Other than your key expenditure, you must take into account your gratuitous expenses. And, when you see them, you need to lower or totally eradicate these wanton expenses, particularly if your expenditure is overcoming your income.

4. Be prepared for emergencies

You must keep an emergency deposit in order to prepare yourself for any kind of unanticipated expenses, such as health bills. You must set up an amount that you will stash in your emergency fund, for instance $5 a week.

Besides these, you must take steps to ensure that such emergencies do not crop up in future. For instance, if your car is making that weird sound, take it right away to the mechanic; do not wait for it to sit down completely. If you are coughing since a few days, consult a doctor; maybe it can be a cue to a big disease.

5. Protect yourself

As much as it is important to check your spending habits, it is also crucial to spend on yourself to guard yourself against adverse incidents in future. And, this also includes your family as well as your possessions. This calls for insurance.

Insurance may seem to you as a big expense at first, but you will be thankful for it in future when you require it. There are many different types of insurance, you can choose the key ones within these, which include life insurance, health insurance, car insurance, renter’s insurance, etc. In the form of insurance, you will be fully covered.

6. Invest and save

Investing your money is also important. Whether it is in real estate, stock market, bonds, gold, or something else; you must set some money aside so that it can grow over time. Additionally, you should save money for your short-term goals, such as making big purchases, going on a vacation, planning for your wedding, etc. After all, splurges can boost your vigor and make saving money fun too.

These are the 6 steps that can help you in your goal of advancing your finances. These can help you to be successful in life monetarily. You will have money for emergencies, your savings, as well as your investments, in one fell swoop.

Resources:

1. https://www.thebalance.com/how-to-track-your-expenses-2385695
2. https://www.investopedia.com/personal-finance/personal-finance-apps/
3. https://www.thesimpledollar.com/trimming-the-fat-forty-ways-to-reduce-your-monthly-required-spending/
4. https://investor.vanguard.com/emergency-fund/amount
5. https://www.investopedia.com/articles/investing/072816/what-best-age-get-life-insurance.asp
6. https://money.usnews.com/money/personal-finance/saving-budget/articles/2017-06-30/how-to-invest-your-money-for-the-short-and-long-term