When it comes to personal finance, there are certain elements outside of your control. You may not be able to change how much you make at your day job or how much your basic expenses cost, at least not in the short term. However, there are plenty of small ways you can improve your finances through good financial habits.

How to manage your finances

Successfully managing your finances can seem intimidating if you’re not sure where to start. When it comes to banking, borrowing, and investing, the options can be overwhelming. But good personal financial habits are built on a very simple foundation: spend less money than you make. Increasing your income and decreasing your expenses is at the core of a healthy budget. Beyond that, there are other changes you can make to achieve your investment goals faster.

Don’t overspend on credit cards

Digging into your wallet for your credit card can be tempting, especially when times are tight. However, putting expenses on your credit card now and paying them later should only be considered during an emergency. You should make it a goal to pay off your credit card balances in full each month.

Paying off credit cards on time makes good financial sense. The higher the balance you carry over on your card, the more you’ll pay in interest. This can sap your savings and eventually generate a mountain of debt that’s difficult to pay down. It’s okay to occasionally use credit cards to finance purchases, especially if you’re interested in building credit or reaping the benefits of rewards credit cards. But you should make every effort to pay the balance off as soon as possible.

Decrease your credit utilization

Credit utilization refers to the ratio between your credit card balance and your credit limit. Having high credit utilization is a sign to lenders that you may be a risky investment. If your credit utilization is too high, it can result in a lower credit score, which can, in turn, make it more difficult to qualify for loans, credit cards, and other financial products. Even if you do qualify, you may be subject to higher interest rates and fees.

If possible, try to keep your credit utilization below 30%. You can also request a credit limit increase from your card issuer to lower your credit utilization. To keep your credit utilization at a reasonable rate over the long term, try to keep your credit card balance to a minimum whenever you can.

Always shop around

It doesn’t matter what the financial product is, you should always shop around to ensure you’re getting the best possible rates. Whether you’re taking out a loan, applying for a credit card, purchasing a home or car, or applying for an insurance policy, it always pays to compare different providers.

It can be tempting to go with the path of least resistance when it comes to applying for financial products, but you should resist that temptation! Even if you already have your heart set on a particular lender or company, shopping around can provide you with valuable information about the rates you qualify for. In some cases, you can even share rates you found with the company you’re interested in working with. See if they’ll give you a better deal!

Sites like Bankrate and NerdWallet are great for comparison shopping financial products.

Focus on significant expenses, not small ones

There’s plenty of financial advice suggesting your daily latte or avocado toast is to blame for the state of your finances. However, research shows that’s just not true: income inequality, stagnant wages, and the rising cost of living expenses have a far more significant impact on your finances than your coffee habit.

When it comes to costs and expenses within your control, it makes sense to focus on the ones that will have the most significant impact: rent, car payments, health insurance, and other big expenses that take a significant chunk out of your monthly pay. Significantly reducing these major expenses is much more meaningful for your finances than reducing small, everyday expenses that increase your quality of life.

Setting Yourself Up for Financial Success

Creating good financial habits takes patience and discipline. While small changes to your finances might not seem significant on their own, they can add up over time. Enacting responsible financial strategies can ensure your finances thrive in the future!