Yahoo Finance I’m a Financial Expert: 8 Money Resolutions That Can Break the Cycle of Poverty
The gravitational pull of poverty is so strong that being poor is often a generational affair. But if you’re trapped in a low-income lifestyle, 2024 could be the year you break the chains.
As the owner of Companies That Buy Houses, real estate agent Riley Annen helps people who have fallen into financial trouble sell their homes and assists low-income people in gaining enough financial stability to buy one of their own.
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With this unique perspective on both directions of socioeconomic movement — people getting out of poverty and falling into it — the real estate author and investor leveraged her experience to outline eight money resolutions that can provide a ticket out of low-income life.
“The following steps in your financial journey can contribute significantly to breaking the cycle of poverty and achieving long-term financial success,” said Annen. “Remember, progress is gradual, and consistent efforts lead to positive outcomes.”
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Commit To Financial Literacy and Spread the Word
The first and most crucial step to breaking the cycle of poverty is free — educate yourself on the fundamentals. That includes learning about debt, credit, interest, budgeting, spending plans and the basics of investing.
“Financial education is a continuous process,” said Annen. “Begin by reading books and articles on personal finance. Attend workshops or enroll in online courses to deepen your understanding. Continuous learning equips you with the knowledge and skills needed to navigate various financial situations confidently. Share your knowledge about managing finances with friends and family. By creating a support system where individuals learn from each other’s experiences, you contribute to building a financially aware and empowered community. This collaborative approach fosters a sense of shared progress and growth.”
Set Reasonable, Reachable Goals
As you’re learning the financial fundamentals, start setting goals that are ambitious, but not too big to be unreachable. For example, if you’re living check to check today, you’re unlikely to become a millionaire in 2024.
“Define both short-term and long-term financial goals,” said Annen. “Short-term goals might include building savings, while long-term goals could involve buying a house or planning for retirement. Breaking these goals into smaller, manageable steps ensures a clearer path to achievement and helps you stay motivated.”
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Tune Into Your Credit and Start Working To Improve It
In 2024, anyone struggling financially should resolve to examine their credit reports, learn their scores and keep regular tabs throughout the year while doing everything possible to improve their standing.
“Building good credit is essential for financial stability,” said Annen. “Ensure you pay bills on time to establish a positive credit history. Regularly check your credit report for accuracy. If you have credit cards, use them responsibly and avoid accumulating excessive debt to maintain a healthy score.”
Create a Budget
Even the affluent can fall into financial disarray if they don’t track their income and expenses, so it’s an absolute necessity for those already behind the eight ball.
“Create a budget that allocates money to essential needs like housing, utilities and groceries,” said Annen. “This helps you take control of your finances, making it easier to manage your money effectively.”
Start a Modest Emergency Fund
When there’s not enough money to go around, every day is an emergency, so setting money aside for a hypothetical future crisis might seem like a waste of precious resources. But even the most modest of savings can provide a buffer against unforeseen challenges. With nothing in the bank, you’ll have to borrow to get through a crisis — and debt perpetuates poverty.
“An emergency fund acts as a safety net for unexpected expenses,” said Annen. “Start small by saving a percentage of your income each month. This fund provides a financial cushion for unforeseen events, such as medical emergencies or car repairs, offering peace of mind and preventing these situations from derailing your progress.”
Search For Extra Income Anywhere You Can Find It
If there’s simply not enough money coming in, learning, budgeting and examining your credit can go only so far.
“Actively search for better-paying job opportunities or acquire new skills to enhance your marketability,” said Annen. “Additionally, consider exploring side jobs or freelancing to supplement your income and create additional financial stability.”
Invest Any Leftover Dollars
Thanks to partial-share trading and index fund ETFs, even novices on the most modest of budgets can begin building a financial future — even just a few dollars per month is infinitely better than nothing.
“Investing, especially in diversified portfolios or retirement accounts, is a pathway to long-term wealth,” said Annen. “Start early to take advantage of compounding growth. If available, participate in employer-sponsored retirement plans.”
Live Within Your Means
In a country where half of all six-figure earners live check to check, the importance of spending within your means transcends income brackets. Get in the habit now so you don’t blow it when you have enough to be comfortable.
“Distinguish between needs and wants to prioritize spending,” said Annen. “Allocate more resources to essential needs like housing and food while finding ways to cut back on nonessential expenses. Living within your means allows for better financial stability and paves the way for achieving your goals.”
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This article originally appeared on GOBankingRates.com: I’m a Financial Expert: 8 Money Resolutions That Can Break the Cycle of Poverty
