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Effective Methods to Become Financially Successful in 2023

Dave Ramsey is one of the leading financial experts who have realized how to become financially successful. Like other people, he has also experienced financial troubles. Yet, this has brought him to better understand the principles of personal finance.

Those who aspire to further their financial situation’s potential can also look up to Benjamin Graham and Warren Buffet. By learning what these financially successful people know about managing money, you can apply the same rules and set free any worries revolving around it.

1. Create a Budget for the New Year

To create an effective budget and savings plan for the new year, you must first consider the financial mistakes you made last year. If you used to pay primarily on your wants more than your needs, it’s time to reconsider where your money goes.

Doing so would require you to divide your salary into different categories. List first the high-priority needs, then second the fixed expenses, and so on and so forth.

Here’s a sample showing how many percent of your salary should be spent on certain items:

Disposable Income Per Month Percentage of Pay
$7,000    
Living Expenses    
Savings $1,000 14.28%
Food and Groceries $1,200 17.14%
Rent $2,000 28.57%
Utilities $600 8.57%
Transportation $160 2.28%
Emergency Fund/Health Insurance $500 7.14%
Dental Insurance $500 7.14%
Miscellaneous Items $540 7.71%
Retirement Savings $500 7.14%
Total Expenses (Excl. Savings) $6000  

Aside from the ones listed on the table, you can also occasionally treat yourself, but try to spend on what makes sense. You can take your budget off the funds for the miscellaneous items or find other means to fund your travels or hobbies.

2. Cut Down on Non-essentials

If you pull your statement of account, you might find that a significant portion goes directly to your monthly subscriptions. It could be that you are paying for streaming services, like Netflix, Youtube Premium, etc. but rarely use them.

If such is the case, consider opting for low-cost streaming services or taking a break from these subscriptions.

Not only that, but you must also look into other non-essential items and redirect the budget to other things that are more important or, better yet, put them into your savings account.

3. Know Where Your Money Go

Keeping track of where your money goes by checking on your payment history will make applying changes to your spending habits easier when needed. After all, mindless spending can make you wonder why you’re short for a certain period.

To reach your financial goal or save enough money, use helpful budgeting apps, such as Personal Capital, Mint, Pocket Guard, and GoodBudget, to make tracking expenses easier or your local library for personal finance books.

The basic idea to achieving success financially is to divide your salary into three categories: needs, wants, and savings.

If you have bills to pay off regularly, make a direct deposit, so you won’t be tempted to use this fund for other expenses.

If you’re paying off a personal loan, student loan, car loan, credit card debt, or other high interest debt repayment obligations, settle those with high interest rates first. This way, you can avoid paying the compound interest from your debts.

4. Build Your Emergency Fund

As a rule of thumb, your emergency fund should be 3 to 12 times as much as your monthly salary. This is because medical bills are notoriously expensive. When you save money, emergency medical situations will less likely to cause a substantial financial setback.

The earlier you start saving money, the better. Make sure to have enough insurance for emergencies monthly by setting up a separate or new account for this. You can also consider creating and updating your estate plan to determine what happens after your death.

This way, you won’t end up leaving your family in a poor financial situation.

5. Become a Generous Person

According to Ramsey, generosity is a sign of someone who has good financial health. There’s a principle that what you give to others will return to you in several folds.

If you just look at Warren Buffet and Jeff Bezos, who have given away billions of dollars in their lifetimes, they are still richer than ever.

When you practice generosity, you’re creating a profound impact on people, and they might be the help you’d need later on. However, it’s best to help without expecting anything in return.

Nonetheless, there’s no harm in being thoughtful and giving.

Additional tip:

Aside from working for your current employer, looking for a side hustle can help you to have more income streams and improve your financial health.

Take advantage of social media and set up your online business. You can sell anything through Amazon, eBay, Carousell, and Facebook’s marketplace.

Others earn extra money by selling clothes online or by becoming a reseller. You can also invest in the stock market if you’re knowledgeable about it or real estate if you aim for a passive income. Another idea is to apply for a higher-paying job or become self-employed.

You can work in the comfort of your home by being a virtual assistant, paying an average of $2,000 to $2,500 per month, or becoming a customer service representative with an estimated monthly income of $1,500 to $3,000.

Closing

Have security you need by planning out your finances as early as possible. The strategies listed, when applied, can intensely transform your life. That said, learn your spending habits, understand your core needs, and manage finances accordingly.

Key takeaways:

  • Make use of your employee benefits such as vision insurance, travel allowance, and more.
  • Always have a strong reason before you spend more money on an item. This is one way to build wealth.
  • Although rewarding yourself sometimes is nice, you should still stick to spending money wisely. There’s no use saving $10,000 and then spending half of it for a vacation.
  • Make use of your time. If you can do a part-time job, don’t hesitate to apply. What you earn from it can help your expenses or improve your finances.
  • See if you have unclaimed money. Old tax refunds, pension accounts, and other sorts can be considered free money.