10 Ways to Improve Your Future Financial State A 2022 study found that by September of that year, 63% of Americans lived paycheck to paycheck. Many of these people don't think about how their spending habits will impact...

A 2022 study found that by September of that year, 63% of Americans lived paycheck to paycheck. Many of these people don't think about how their spending habits will impact their future financial state. It's easy to get so caught up in your daily wants and needs that you lose sight of your future financial goals. Although people don't think of accumulating savings as exciting in the short term, it's extremely important later on down the road.

In the more immediate term, savings provide a cushion in the event that you experience a financial emergency. Without comfortable savings, a trip to the hospital, a layoff or even car troubles could derail your financial stability and plunge you into debt.

In the long run, healthy savings will give you the freedom to live your life without fear and will open the doors to greater financial opportunity. The best time to start saving is now, because the sooner you start saving, the higher the payout will be in the future. Here are ten steps you can start taking to improve your future financial state.

1. Acknowledge your motivations and set goals

Before you set out on your mission to improve your future finances, take some time to think through exactly what you would like to accomplish and what is motivating you to make a change in your life.

Think about where you'd like to be financially one year, five years and ten years from now. Writing down these aspirations on a piece of paper, on your phone or on your computer will help cement these goals in reality.

You should also visualize how your life would improve if you had more savings, financial security and independence. Maybe you hope to own a home, pay off all of your loans or be able to provide for your children. Write down a list of the things that are motivating you to improve your future financial state, and keep them as a reminder for when times are tough or you've slipped up.

2. Assess your current financial state

Next, start thinking more concretely about the actions you need to take in order to reach these goals. One of the first steps in financial planning for your future is to understand your current financial situation and spending habits.

Comb through your credit card and account statements and examine where all of your hard earned cash is going each month. You might surprise yourself by how much you spend on coffee or Ubers each month. You'll start to recognize the spending patterns eating away at your paycheck and preventing you from accumulating long term savings.

You should also account for all of the regular, unavoidable payments that you need to make on a regular basis. Calculate how much you owe for loan payments, rent, mortgages and insurance and see how much of your income needs to go towards these necessities.

Once you understand where all of your money is going, you can take a critical look at the spending habits that you need to change. You will also be better prepared to make a realistic monthly budget that you can actually stick to.

3. Identify where you can cut back

Once you understand your financial past, you can more easily recognize the areas where you can cut back. Maybe you can reduce the number of times you eat out each month. Or, you can make a more concerted effort to take public transportation instead of taking Ubers or Lyfts. Perhaps there are some monthly subscription services you could stand to live without. Only you understand the difference between what you want and what you need to stay healthy and happy. So, engage in some personal dialogue about what things you need and what you can live without.

Take 24 hours before making a major purchase like a new computer or a pair of shoes. This time gives you the space to decide whether that item or service you are considering buying is something you will actually need or will help you in the long run.

Each person has different spending habits, so the ways in which you cut back will look different for everyone. Do your best to live below your means while still prioritizing the things that bring you genuine joy.

4. Create a budget and stick with it

Budgeting is one of the most important ways to meaningfully boost your savings. A budget makes it possible to set goals and track your spending and is one of the best ways to actually set aside savings on a regular basis.

There are several schools of thought when it comes to your budget. Some say you should adhere to the 50/30/20 rule, where 50 percent of your income goes towards your needs, 30 percent goes towards your wants and 20 percent is set aside for savings. Another popular budgeting rule is the 70/20/10 rule. Here, 70 percent of your income goes to bills and everyday spending, 20 percent goes for savings and 10 percent applies to debt repayment.

These are all just suggested frameworks, and ultimately you should personalize a plan that makes the most sense for you.

If the thought of making your own budgeting spreadsheet sounds like a drag, there are plenty of free apps to help you customize your budget. Many let you link your accounts, get notifications about your spending and set goals for each of your individualized spending categories.

5. Make a separate account for your long-term savings

You will be less tempted to dip into your savings if you are keeping your savings and your disposable income in separate accounts. Taking the action of transferring money into your savings account each month can serve as a monthly reminder of what you are trying to accomplish and helps you compartmentalize the different ways you're allocating your income.

You may want to set aside your savings money as soon as you get your paycheck so that it is immediately taken out of the equation. This forces you to budget for the upcoming month based on the money left over in your checking account.

6. Set up a savings account specifically for emergencies

By the same logic, it's a good idea to create an account specifically designed as a safety net in case of emergencies. Peace of mind is one of the main reasons you may be motivated to start saving, and for good reason. Knowing that you can support yourself in the event that you lose your job or encounter an unexpected financial burden can improve your mental health and let you be more present in your daily life.

Keeping an emergency savings account separate from your checking account decreases the chances that you'll dip into it when your disposable income starts to dwindle, and helps you compartmentalize the purpose of your goal of boosting your savings in case of emergency.

7. Invest in yourself by taking courses and learning new skills

Even when you are working on cutting back, be sure to differentiate between what is a frivolous desire and what is a worthwhile self-investment. Investing in yourself can be one of the best ways to improve your future financial outlook so be sure to keep that in mind when making important financial decisions.

Operating on a budget should not stop you from expanding your skillset or improving your qualifications. Whether you are considering investing in your education, starting a business or even kickstarting a side hustle, an investment in yourself can improve your financial state and pay dividends in the future.

8. Start saving for retirement as early as possible

Most experts agree that you should aim to put 10-15 percent of your annual pretax income towards your retirement savings. If you follow these guidelines, you should be able to live a comfortable life after you've retired and might even be able to retire early. If you do not start taking your retirement savings seriously, you could end up working later in life, and spend your time working when you should be relaxing and enjoying your golden years. The earlier you start investing in your retirement savings the more your investment will grow by the time you are ready to retire, so getting started soon is the smartest way to save for retirement.

When saving for retirement, there are many investment accounts that have amazing tax saving benefits, like 401ks, IRAs and Roth IRAs. Each account has different nuanced requirements and regulations so look into which option is best for you.

However, remember that once you put your money into these types of accounts, there are restrictions on how and when you can access the money in your account. Even still, most experts recommend you open up a 401k, IRA or Roth IRAs when saving for retirement so you can get the most out of your hard earned savings. The earlier you start investing your savings the more it will grow over time, so be sure to carve out room in your budget for regular contributions to your retirement savings account.

9. Get out of debt

Interest payments on loans and debts are a painful way to part with your hard earned funds. Unfortunately the only way to end this troublesome cycle is to climb your way out of debt, one payment at a time. The sooner you pay your debts the quicker you can start allocating that portion of your budget for future savings. Therefore, you should make it a priority to pay off your loans and debts as soon as you can.

Similarly, don't waste your money paying late fees, overdraft fees or any other pointless fees that don't serve your needs or future goals. Stay financially responsible with your accounts, cards and loan payments. It'll help ensure you avoid making careless mistakes that unnecessarily drain your funds, keeping your cash available for future savings.

10. Track your progress over time

Staying motivated is easier when you keep track of the progress you have already made. Once your savings start to grow and you begin seeing the results of your hard work, you will feel proud of what you have already accomplished, and will be more likely to keep up your healthy spending habits over the course of your life.

Diligently saving money is the only way to guarantee you will improve your future financial state. It's also a surefire way to gain financial independence and freedom. Of course getting started is the most challenging step. However, if you take it day by day, you'll start reaping the benefits of your financial discipline. Then you'll see tangible results in the form of dollar signs in your savings account.

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