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Need to know how to improve your financial situation? Using these three documents can help you reach the goal of financial independence.
There will be times when cash doesn’t flow as you wish; it doesn’t matter what type of business or job you have. Having a plan in place means that you can weather even the worst economic downturn and bounce back quickly.
Regularly reviewing your finances is a good idea and having a backup plan available in case something goes wrong is also a great decision. The question isn’t “if” it will happen; it’s “when.”
Realistically, let’s be honest. Here are three things you need to collect to understand your current financial position.
How to Improve Your Financial Situation – Documents You Need
Bank Statements from the Last Three Months
You need three months of statements because it will give you a better average of your expenses. You can easily calculate the amount you spend on dining out, personal healthcare, and entertainment.
The statements in your bank account will show you where you are losing money by making mindless purchases. For example, if you pick up candy or coffee every time you fill up your gas tank, you are wasting money that you can ditch when needed.
This will help you create your budget and figure out places where you can cut expenses.
Take an honest look at your expenses and start tracking them so each month you can see where your money is going without having to pull up all of your bank statements and credit card bills every time.
Once you are tracking your expenses like this it will be easy to see ways to cut your bills when things come up that require more money or if your income takes a hit.
When counting your income, include only your after-tax income instead of the before-tax one. After all, this is what you have available to spend.
If you don’t have taxes taken out of your check be sure to take that money out when you are depositing it. You can put the tax amount into a savings account to take out when you pay your taxes. This will help prevent you from having a surprise tax bill.
Keeping it all Organized
A great way to keep all of these things organized is with a budget planner. The one available here on In Harmony With Money is beautiful and easy to use. Plus you can buy it once and use it over and over again saving you a lot of money.
Getting ahead financially, or in any other area of life, requires understanding where you are now. You probably benefit a lot from this patience-required process. These other resources can help you continue to improve your financial situation.