Getting your finances back on track can be an overwhelming task. Someone looking to better their finances and their life might be looking for guidance or a 10 step program to making it happen. The answer to how to better your financial situation is the same as the age-old question, “How do you eat an elephant?” The answer, of course, is one bite at a time.
There are many “bites” you can take when cleaning up your finances:
Create a Budget
Creating a budget includes writing down your income and expenses including those things needed for day to day living. In order to manage your money, you have to know where it’s coming from and where it’s going.
Track Your Spending
You can’t change something you don’t track. You might be unknowingly spending an insane amount of money on eating out, morning coffee, or groceries. Until you see it in black and white, overspending on something will be impossible to change.
Evaluate Your Expenses
Once you have a list of your expenses, you might see some things that are not worth the amount you’re spending on them. You might decide there are services you can do without and cancel them.
After trimming the low hanging fruit, you may decide you want to cut spending even more. You might decide to stick to a strict spending amount for discretionary spending or reduce how much you spend on groceries. This is a conscious decision and effort to spend less money.
Create An Emergency Fund
You can work very hard to control where your money goes, and to use it as efficiently and wisely as possible. But unless you have an emergency fund, one trip to the doctor or one fender bender can throw your finances back into chaos. Having some funds stashed away for the unexpected will help you stay on track.
Save For Retirement
Once you have the present day to day financial tasks in order, the final piece of the puzzle is to start planning for the future. This includes taking advantage of any employer 401k matches or stock purchase programs.
There are a lot of moving pieces involved in properly handling your finances. Trying to do them all at once is certainly overwhelming. But if you start small and take it one bite at a time, you’ll eventually get there.
How about you, Clever Friends, are you feeling overwhelmed getting your finances back on track?