Financial security plays an important role in ensuring you attain your wealth, health, and happiness goals. It means you have enough to cover your expenses and save for your retirement.
Tomorrow, August 14th, is National Financial Awareness Day. It’s a day where you have the opportunity to focus on your financial habits and how you can build them up to achieve a stable financial future. And if you haven’t already, it is also a day to encourage you to start your journey of saving and investing for financial freedom.
What Is Financial Awareness Day?
Financial awareness means financial literacy. How smart are you about your savings and investments? How much debt do you have? What is your investing style? These are some of the questions every business owner or independent worker should be familiar with in order to test their financial knowledge and gain skills to help build a golden nest for the future.
No matter where you are on your journey to financial independence, the first and most important step is to take control of your finances. Remember, your income is a vital tool as you work towards financial freedom.
5 Ways to Increase Your Financial Awareness
As you look internally at how well you manage your money, here are five simple but effective steps you can take to increase your financial awareness.
1. Know your worth
This fits as the first step to being aware of where your money comes from and where it goes. It’s important to examine all the sources of your income. These can be from one main job, self-employment, or both. Maybe you also earn from interest-earning savings accounts, stock dividends, or mutual bonds.
Naturally, you must also spend on essentials like food, housing, clothing, and medical expenses. When you make a comparison, you should have an idea of how much is left over after spending. That way, you get to know your true financial situation.
In addition to knowing the basics of what you’re earning versus what you’re speending, you can use other data points, like your credit score to evaluate your financial health. Checking your credit score will not affect your credit. Your credit score is your credit rating, on a scale of 0 – 850. According to consumerfinance.gov, “A credit score predicts how likely you are to pay back a loan on time. A scoring model uses information from your credit report to create a credit score.” It’s easy to check your credit. You can use a free service such as annualcreditreport.com. Your bank can also provide you with information on your credit scores. Check your credit score regularly to make sure you are paying off your debits so that you have more potential to borrow in the future.
2. Make (or review) a budget
If you frequently run out of money before the month ends, a budget could help. A budget is a spending plan based on your future income which you allocate to your expenses, savings, and debts. If you’re not sure where to start, we recommend trying the 50/30/20 rule.
After calculating your monthly income, allocate 50% of the income to needs, 30% to wants, and 20% to savings and investments. This guides you to effectively manage your after-tax income and achieve your financial goals without complicating the process.
If you already have a budget, you can update it as you see fit. You can review it once a month or weekly, but the more regular, the better. Have a look at where you are overspending and underspending. If you find that you’re spending more on going out and less on groceries, you can readjust.
If you get a pay raise or increase your earnings by completing additional Shift Gigs, don’t be tempted to increase your spending. The idea is to raise enough money to grow your emergency fund (more about that later), savings, and pay off your debts.
3. Start a side hustle to earn extra income
Having a side hustle may take up more of your free time, but it also means more money in your pocket. There are countless ways to make money today, ranging from serving at your local cafe to freelance work. You can sign up for a free Get Gigs account to easily browse and apply to gigs and jobs hiring in your area. With hourly, part-time, and full-time opportunities listed directly in the app, Get Gigs gives you an easy means to pick up extra shifts in order to add to your earning potential.
With the extra income, you can save and invest more. In a survey of Rich Habits based on wealthy individuals, one of the findings was that 65% of self-made millionaires had three streams of income. A side hustle will offer you a safety net should you lose your main source of income, which will help you continue to invest in your financial future.
4. Save for retirement
Saving is always a top topic when reviewing the majority of financial advice. Good savers are those who generally saves 10% to 20% of their income. But did you know it can be easier to save more than 20% as long as you’re conscious of your spending habits? In addition to bumping up the amount you save, you can use retirement accounts like Roth IRAs or Traditional IRAs to help you save more money over time.
If you’re also finding it hard to stay the course in saving, you can automate. Set up your money to automatically transfer a set amount from your checking account to your savings account. You can also take advantage of saving and investing apps such as Mint to track your savings. It’s all about motivating and pushing yourself to save more in the long term and afford a comfortable retirement.
5. Set up an emergency fund
Generally, you’re advised to save three to six months of your living expenses towards an emergency fund. It helps you cover any unplanned costs such as medical bills, car repairs, or unexpected job loss. You will also avoid getting into debt as it acts as a cushion to help you survive through the tough times. Of course if you do find yourself out of work, you can always use the Get Gigs app to work hourly Gigs hiring in your area. Who knows, you could even find a new permanent employer as many of our Shift Gig workers have been converted to full-time hires after successfully completing a few Shift Gigs.
In addition, you also protect any savings and investments you’ve established. When you manage to set up a fund, it’s prudent to ensure it’s liquid since can’t predict emergencies. You can also put in a high yield savings account that earns interest and has easy and quick access. An emergency fund eases your mind to focus on tackling your debts and building your savings even more.
Taking Control of Your Financial Future
As you look forward to celebrating National Financial Awareness Day, take time to reflect on where you stand in your financial journey. Having financial awareness is an important step towards living the life you want.
These tips act as a guide to inspire and encourage you to take control of your finances so you can live a wealthy life. You’ve also become aware that income plays a critical role in your financial success.
And if you’re looking for an easy way to get started, how about an extra side hustle or a new job? You can create a free Get Gigs account to start browsing the local opportunities actively hiring in your area. With a wide list of available Gigs and Jobs, you can gain more experience and earn more money. Take advantage of Get Gigs to help you on your path to gaining financial independence.