Are your finances out of control? Do you find that you’re always stressed about this bill or that? Is it challenging for you to afford things you need, let alone things you want? If you’ve answered yes to any of these questions, perhaps your finances are out of whack. When you don’t have a clear understanding of your income, expenses, and savings, surviving becomes difficult to do. Fortunately, there is a solution to all of this. By getting your finances in order you will find that you can cut out waste, stretch your income further, and increase your savings. Here are five steps to get started.
Start Tracking Your Money
Budgeting is the first and most important step to money management. When you properly budget you’re able to track your spending and cut back in necessary areas to spread your income further. Start by calculating your total household income on a monthly basis. Then, write down all of your bills for the month. Next, review receipts, bank, or credit card statements and tally up the total costs of other expenditures. Create line items or categories like rent/mortgage, utilities, groceries, car note, insurance, credit card debt, loans, entertainment, medical, etc.
You now have a full understanding of how much money your family makes and how much of that income is disbursed to bills and other miscellaneous expenses. As you look at the difference between your income and expenses, are you pleased with how much money you have leftover? If not, it’s time to reduce waste. Look at your spending habits to see where you can eliminate some costs. Maybe instead of eating out for lunch every day, you just eat out on Fridays. Perhaps you could put a cap on entertainment costs and try to find affordable things to do within that budget. Review every category on your budget and see if there aren’t ways you can save money.
Pay Down Debt
To stretch your income, you’ll need to free up as much money as you can. You’ve already altered your spending habits and saved on your household bills. Next is paying down debt. There are a number of ways you can start paying down debt including paying the smaller debts first, paying debts with the highest balances first, and paying more than the minimum on multiple debts. You can use alternative payday loans for bad credit if you don’t have a surplus of cash right now to dedicate to debt payments. A loan for $1250 can take a huge chunk out of what is owed and keep negative accounts from doing more harm to your finances. If you choose this option, be sure to add the loan repayments to your budget.
Set Savings Goals and Save
You should now have a decent amount of money leftover in your budget. If you don’t now, you most certainly will after getting rid of some of those debts. In order to prevent wasteful spending again, it is imperative that you start putting the excess cash up for savings. Start thinking about things you’d like to do in the future. Ideas might include going on vacation, retirement, sending your kids to college, or having an emergency stash. Now, divvy up your remaining income into each of your savings accounts.
When your finances are out of control they can run your life (and not in a good way). If you’re tired of being stressed out or not having enough money to survive, you can do something about it. Get your finances in order by creating a budget, reducing spending, paying down debts, setting saving goals, and saving. Maintaining this process on a monthly basis will lift a huge weight off your shoulders and allow your money to start working for you (instead of the other way around).