You’re busy – I get it.
You have a lot of stuff going on, and spending time on your finances seems like another huge responsibility to add to your already full plate.
But whenever you take a look at your wallet, you wonder where all of your money went. You haven’t looked at the details of your credit card bill in months, and you have a pile of unopened bills lying on the kitchen table.
You keep telling yourself that you’ll get around to creating a budget, but you never do it.
You want to dig yourself out of the financial mess you’ve created, but you feel like you’ve lost all control. Maybe next year, you tell yourself.
By failing to plan, you have planned to fail. You’ve gambled with your money by not telling it where to go. If this sounds like you, you can regain control by following these tips.
1. Create a Super Simple Budget
Creating a budget is one of the oldest pieces of financial advice. And, there are good reasons why.
When you make a budget, you’re telling your money where to go. You are also reminding yourself what’s important to spend money on. If you don’t control your money, then it will control you. The problem is that most budgets are too complicated to actually stick with. For those who don’t like to follow a complicated set of spreadsheets, you need a simple budget.
If making a monthly budget is too hard for you, then make a budget for each of your paychecks. When you get your paycheck, immediately write down all of your expenses for that pay period. Pay your bills first, then set out grocery money and spending money. After all of your necessary living expenses have been met, divide the rest between your savings and investments.
2. Be Honest About Your Spending Habits
How many times have you bought something brand new and then barely used it?
Probably more than you’d like to admit. An occasional spending slip-up happens to the best of us, but it shouldn’t be a repeated habit. Take a look around the house and examine your past credit card bills and receipts. What do you buy too much of? What do you buy and then never use?
Make mental notes of items on which you’re wasting money. Now when you make your budget, be sure to cut out or limit the amount of money you’re spending on unnecessary items. When you go shopping, carefully evaluate the items you intend to purchase. If you don’t need it, don’t buy it.
3. Be Prepared
Everybody needs an emergency fund because let’s face it: accidents do happen. If you’re usually paying for life’s little emergencies on credit, then you need to change your ways.
If you’re not used to saving, or if amassing a large emergency fund feels out of reach right now, then start small. Set mini-goals for yourself. Start with a five hundred dollar emergency fund and challenge yourself to see how fast you can meet your goal.
You can work extra hours, sell items around the house, or make major budget cuts to reach your goal. After you hit your first goal, make another. Ideally, you should have three to six months’ worth of expenses saved – but ultimately you need to save what makes you feel safe.
4. Pay Down Your Debt
Carrying a big load of debt makes you feel stressed and trapped. After all, who wants to spend their entire life handing over money to their debtors?
Make a plan to free yourself from the burden of debt.
You can use the debt snowball method of paying off debts smallest to largest, or you can pay off debt according to interest rates. Make the decision that you’re going to get out of debt and stick to your plan no matter what.
There will be days when you feel like you’ll never get ahead. There will be days when you want to spend your savings on entertainment. Paying off your debt will require hard work and determination, but it can be done.
Don’t give up. Like Nike says, Just Do It.
5. Start Investing
The market is at all time highs, and you might be nervous about jumping in now that valuations are at an extreme. But treat investing as just like anything you buy, only that the money you spend on investing actually pays you back some. The stock market goes up over time, but even if it didn’t, you get back more than you did if you just spent it on something else that gives you no long term benefits. Think about it – even a 90% loss meant that you get to keep 10%. When you buy something, you spent 100% that you will never get back. Buy investments and keep buying. You’ll win out over time by having way more than enough to worry about financial trouble.
The Bottom Line
When you make the decision to free yourself from your financial burdens, you’ll feel a sense of relief. Your stress level will decrease, and you’ll feel in control. And that is something to be proud of.
Pay down your debt, stick with your simple budget, evaluate your spending, and prepare for emergencies. As you get a bit of cash flow, start investing. If you can do these things, you’ll be on your way to financial freedom.
Do you have any other tips for regaining control of your finances?
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Yes, I think that when we have debts. We will definitely be able to have a good financial status.I also think that paying off debts and making a budget will surely help for us to become debt free. Thanks for sharing this article.
I also agree. I think that it is really important to avoid debts. I think that by doing this we can have a good financial status. Thanks for sharing this article.
Our City even gives you a savings if you sign up to pay a monthly tax and utility bill rather than be billed once a year…………we have a similar plan with our hydro or electric bill………no variables the same amount every month year round…see if your company does this and ask if there is a savings built in…I would use it just to make budget planning easy.
I really like your idea of a simple budget. That’s an area I’ve struggled with. When it’s too complicated, a budget feels overwhelming. Thanks : )