Rome was not built in one day. Strong finances take time to build. You have to develop money habits over time, including spending less, saving more, and increasing your income. This is not a short-term goal but a solution that takes time. However, you can start to do several things today that will lead to major differences in your life one year from now.

1. Save More Money

This sounds simple. However, most people acknowledge that saving more money is a lot harder to do than it is to say. The idea is to look at your disposable income and find out how much of that income you can put into savings. This is a four-step process.

1. Calculate the amount of money you make every year. This includes the money from your primary job, settlement payments, side hustles, gifts, etc.

2. Calculate the amount of money you save each year. This includes money put into investment accounts, savings accounts, etc.

3. Divide your savings by your income.

4. Multiply that number by 100 to get a percentage. If you make $6,000 a month and save $600 a month for your retirement, personal savings, and other funds, then your savings rate is 10 percent.

When you do these calculations, don’t forget the money that is contributing to a retirement account, health savings account, etc. Once you know your savings percentage rate, make it your goal to increase it by one percent before the end of the year. Track your progress throughout the year. It is recommended that you save at least 20 percent of your monthly income.

1. Boost Your Credit Score

The better your credit score is, the lower interest rates you pay on your mortgage, credit cards, and auto loans. If you are thinking about getting a new credit card or getting a car loan, or you want to buy a house, improving your credit score by just a few points could save you tens of thousands of dollars.

To improve your credit score, you have first to know what it is. Once you know what your credit history is, you can start to make improvements. You can get a free credit report every single year from Equifax, TransUnion, or Experian.

Have you skipped a lot of payments? Are there old accounts that are long overdue that you forgot about? All of this will appear on your credit report.

Armed with this knowledge, you can take steps to improve your credit over the next 12 months. Over the next year, pay your bills on time. Track your spending. If there are ways to minimize bills, this will give you more money to pay against debt.

The less money you have on credit at any given time, the better. The goal should be to use less than 30 percent of your credit limit. If your credit limit is $20,000, you do not want to charge more than $6,000 at any given time.

1. Become Financially Savvy

In one year, you will not go from being financially illiterate to being a financial planner. However, you can take steps to improve your financial education.

This is more than just learning about the basics of savings and credit cards. Take the time to do some deep dives. For example, you can learn about Delaware statutory trust pros and cons. See how this impacts real estate investors and their ability to take capital gains deductions. Start to think about how this might impact your financial future.

If you have a partner, talk about your financial goals. Identify financial worries and together create financial strategies. Learning about money and being open and honest about money can bring a couple together and minimize the frustration and anger around shared finances.

Don’t be ashamed because you do not know everything about finance. Talk to friends and family about money. Ask them what they are doing and try to learn from their successes while avoiding their failures.

Conclusion

Unless you somehow win the lottery or find a barrel of money, your financial situation will not get better on its own. It would help if you started by tracking your financial spending. Figure out where your money is going and how you can better allocate it. From there, you can take concrete steps to elevate your personal financial position.