Now that we are venturing further into adulthood, we need to get a good hold of our finances. For those that attended college, you most likely have some sort of debt – even outside of your student loans. Here is an outline of how you can get started to getting back in control of your finances.
First-quarter: Track your spending
To begin, if you have a decent relationship with money, then this step should be easy for you. Just examine your spending. Track every dollar and cent that you make and how you spend it. This is important because you need to be knowledgeable about your spending habits. Those Uber Eats orders add up quickly and you may not even be realizing it.
Also, it’s great to know how much money you spend on your essentials and incidentals. How many times a month do you have to put extra money into your car or your home? This can also be eating away at all the extra money you could be bringing in.
So for three months, do a hardcore examination of how much money you make and how much you normally spend to get an accurate measure of how much it costs to be you.
Quick Hack: You can also review your banking statements if you want to get a move on this step.
Second-quarter: Budget, budget, budget
After you reviewed your income and outcome, the natural next step is to make a realistic budget. I say realistic because we’re not going to restrict or deprive ourselves of spending money on things we enjoy. Once you have a firm, but fair budget, it’ll be easier to accept how many impulse purchases you can handle in a month.
Be sure to include a fair number of your “allowance” each month. I personally give myself about $200 a month to spend however I want. I have this money deposited in my second checking account and I can be as strict or as free as I want. If I anticipate buying something that I don’t need, I make sure I have enough money in my “fun account” to not have it taken from my main account.
For more information about how I manage this part of my financial health, check out this blog.
Third-quarter: Make the necessary adjustments
Okay, so you’ve budgeted for a few months. Ask yourself, “Am I making enough?” and “Am I still spending too much?” If you didn’t like your answers, you still have some work to do and that’s okay.
Take the time to reexamine and adjust your budget until everything balances out. If you prefer not to live paycheck to paycheck, it’s going to take some sacrifices and you may have to look into finding additional income. Having multiple streams of income is a great way to get out of debt.
During this time, see if you can make some of your cheaper. Can you go without some of those streaming services? Can you find cheaper car insurance, phone bill, rent, etc.? This time is for you to find ways to save money and decide if you need to find a way to make more.
Final quarter: See it all through
This may be the most difficult part. After you have done all the previous steps, take a few months to see if your adjusted plan is working for you. Do you have enough money left over at the end of each paycheck? Are all of your bills being paid on time? Are you happy with how your budget looks?
If you’re feeling satisfied with your progress and you feel that your new financial habits are working for you, congratulations. Continue to do an awesome job and find a way to reward and celebrate. But if you are still finding it a struggle, you might have to go through the process again as many times as you need to get to the right place. Only you can know how satisfied you are in your personal finance journey.
One last tip, if you are struggling to pay your bills and monthly expenses, I would avoid taking risks with your money such as investing. I also would avoid completely unnecessary and avoidable expenses. It’s one thing to treat yourself to a vacation, but maybe traveling internationally may be financially wise if you aren’t in a good place financially.
What are your financial goals this year?
Comments