Start by writing down the important parts: how much you owe, how much money is in your checking and savings account, and your monthly expenses. Then you’ll be ready to follow these important steps:
Make a Realistic Budget
Budgeting
is the only way to rein in your expenses, and you can create one that suits you…
Track what you spend in one month without doing anything. Just keep living normally, and then look at how you spent your money. You might notice some large leaks, such as frequent food delivery or streaming services you forgot you subscribed to.
This will allow you to start correcting some of your financial mistakes. Then, you can start building a realistic budget for a life that suits your actual needs and organizes your expenses…
Automate What's Important
If you have to remind yourself to pay your bills and put aside savings every month, you're leaving too much to indecision and willpower… Instead, remove those choices from your mind by automating them:
Savings: When you get paid, automatically set aside a portion into savings, even if it's just $15.
Bill payment: Automate all of your bills so you don't have to think about whether to pay them or not.
Debt repayment: If you're paying down debt, such as student loans or credit cards, set up extra payments after you get paid, so you're slowly tackling the debt level in addition to the required monthly payment.
Retirement: Set up an automatic contribution to your employer's retirement plan, such as a 401(k) or similar plan. If they don't offer one, set up your own, such as a traditional IRA or Roth IRA.
Create an Emergency Fund
Setting money aside for unexpected expenses is imperative for good financial health… Allocate money to an account you won't touch…
You can start small, contributing $50 or $100 a month, and slowly build it up. Ideally, you want to be able to cover three to six months of expenses. If you end up using your emergency fund, make it a priority to build it up again.
Build Credit Correctly
Borrowing money isn't bad if you do it correctly. In fact, building up a credit history is essential if you ever want a loan for a house, a car, or any other form of credit.
If your score is low, you can fix this. Here are some easy steps:
Check your credit report: You can get a free one from one of three main credit bureaus (Equifax, TransUnion, or Experian) or annualcreditreport.com. Check it for any errors that are bringing down your score, and have those corrected.
Pay your credit card bill on time: You should always pay the minimum to keep good credit, but pay more if you can.
Adjust your utilization: If your credit utilization level is 30% or more, start paying down debt. You can use various strategies, such as the snowball method or the avalanche method.
Build credit: If you don't have any credit or if it's very poor, and you can't get a credit card to fix or build it, start with a secured credit card. Use that for just one bill and pay it off monthly.
Cut Out Unnecessary Expenses
It’s easier to stick with a handful of small changes over time rather than drastically alter how you live. If you can start by cutting out unnecessary expenses, you'll be one step closer to reaching your goals.
If you order out three nights a week, try to make it one night a week and save money by cooking. If you're subscribed to four streaming services, try to make it two. Rather than meeting in a bar, invite people over or get together at a friend's.
The money you save from these adjustments can go towards building an emergency fund or paying down debt.
You can read the full article here.
Being disciplines with your finances is not easy. You should take pride in yourself for attempting it, and acknowledge there will be some mistakes. The point is not to be too hard on yourself: Accept that it's natural, and get back on track as soon as you can.
It's not about being perfect; It's about improving your financial situation and making small changes over time. Just wait; you'll see how far you've come!