If life were perfect, we would all have a magic formula that only takes one step to solve our financial struggles. Unfortunately, we all live in the real world, so we have to find a realistic solution to those problems. It's not impossible it just takes commitment to yourself. Struggling day in and day out to keep your head above water financially is stressful, so it's essential to get a hold of your personal finances.
It's not necessary to make it complicated; we are going to use four steps to control our finances. All you have to do is be consistent, continue planning, and your finances can start looking better in little as three months. You will see your financial stress melt away and your lifestyle improving.
Start Strong With Goals
In anything you want to achieve you have to know what you want, so you need to know your goals. Write out specific goals that aim to improve your lifestyle and finances. Your financial status affects all areas of your life so your goals will differentiate with one purpose, financial freedom. Each goal will enhance your life while improving your bank account.
Write down A list of your financial goals, then prioritize each goal from number one priority and countdown. Think of what you need to look at first in your finances, spending habits, savings, income streams or your debts. It's important to start with essential problems that need to be addressed to stop any roadblocks that may come up later. You may want to think also of what you would like to achieve first, what is most important to you. Just remember to think of long-term goals that need to be addressed as soon as possible like saving for retirement plans should be one of your top priority. Making sure you are saving to retire or having a rainy day account helps you stay on top of your finances even when things get tough.
Use These Tips To Identify Your Financial Goals:
Think about the future, long-term goals of eliminating your debts, owning a home that is paid off and even retiring as early as possible. Long-term goals are usually are things you want to accomplish in the next five years or more so think BIG.
Next are your short-term goals, they are a breakdown mainly of your long-term goals. You can take a look at each long-term goals and break it down to monthly, weekly and daily to work on that goal every day. These goals should include things like managing your monthly budget, setting budgets for each activity in your life. Limiting credit card usage can help minimize debts to help you save more each month.
All you have to do is prioritize your goals to create a successful financial plan.
Creating a Financial Plan
A financial plan is essential in helping you reach your financial goals. The plan should have multiple steps. Your plan could start with creating a monthly budget, getting control of your spending then getting out of debt. Getting control of these three areas can help you free up cash you may otherwise not have noticed that you are loosing. You will be able to pay your debts back quicker and invest more of your money.
Creating a monthly budget may seem hard at first, but all you have to do is plan ahead. One of the biggest waste of your monthly spending could be your groceries. Go to your kitchen and check on the food you may have bought and did not eat, what do you waist the most when you do cook or even your eating habits. It helps to plan your meals ahead of the day you go shopping. You are less likely to buy food on impulse; you can plan meals that you want to eat. It works for your everyday needs like beauty products and household items. You can stay on top of what you need and when you need it. It could also save you money when you know a few things you can buy in bulk.
Creating a financial plan is easy, just remember:
Your budget is the key to your success. It will give you control of your financial future, without it the rest of your plan cannot be achieved.
Contribute to your long-term goals in saving more and investing for your retirement. No matter your financial status it is never to early to start saving for the future. Start an investment account like Acorns with just $5 to grow your income today!
Build yourself a rainy day fund, separate money in at least two bank accounts to save money separate from your spending account. You will not see it every day, and it will stop you from seeing that money often, so you are less likely to spend it.
Financial freedom allows you to start working on the critical goals you have set for yourself. The sooner you get started, the sooner you can plan fun things like a fun trip overseas or just a small purchase you have been waiting to make. While all that planning is going on you can be saving to buy your dream home or start building a business. It's important to consider these steps in your life because they create significant changes. You will finally be able to stop making financial decisions based on fear and be able to control what you do and when you do it.
Stick to The Budget You created
Discipline is key to your success in just about anything you do in life, so learn to discipline yourself to your financial plans. Once you have gone over all your accounts, it's essential to create a budget for your monthly spending and 'STICK TO THE BUDGET.' Your financial success depends on you creating a budget for each category in your life to manage the money coming in and going out.
You can get started by using the '70/20/10 Rule' to divide your income for the month. Calculate your living expenses, how you plan on saving and paying off your debts. Use 70% of your income to pay living expenses, 20% in saving and investments and the last 10% to pay off debts. Giving yourself this budget help to curve unplan spending. Now you can focus on your plan each month and know exactly how much of your money is going where. It will be easier to reach your financial goals while focusing on living your life.
It's important to remember to not get out of debt so that you can fall right back in a year later. Once you are debt free still maintain a budget, just take the money you where paying debts and add it to your savings. Not tracking your spending is a sure way to spend more than you make without realizing it.
Digging Yourself out of Debt
The most significant obstacle to reaching your financial goal is your debts. Eliminating all our debts should be one of your top priority.
Create a 'Debt Eliminating Plan' to help you pay off your debts as early as possible. Focus that 10% of your income to pay your debts for at least the minimum payments. When you can afford without disturbing your other areas pay extra on your debts. Look into earning more income to increase the amount of the money you have to pay debts to pay more than the minimum payments. Once you pay off one debt move onto to the next to create a 'snow ball effect' to get out of debt.
A few tips to help find money to pay debts:
Sell unwanted or needed items around the house to make some extra cash on sites like Amazon and Ebay.
Partner up with Airbnb to rent out extra rooms in your home to earn cash.
Any areas you can cut in your budget to increase your payments on your debts do it.
It's not just important to get out of debts; you need to stay out of it. Creating a budget was your first step to success, it's important to develop other steps to help you stay on track. If you like to shop for things that interest you on site build a side spending account. Save maybe 5 dollars a month to have that side account that did not take much out of your income and give you a little splurge money. You can now leave your credit card alone and reach for that cash and have no debts afterward.
Never be Afraid or feel Shame to Ask for Advise
The average person most likely will not have an accounting degree, so investing to grow your wealth require some professional help. Speaking to a financial planner help make smart investment decisions. The risk involved in each investment along with your finding comfortable level of investment to reach your financial goals sooner rather than later. Your financial advisor could give you some great tips to clean up your budget even more. Having a mentor is a great tool, you will have a person to help guide you on your budget and financing for a few months until you get it together.
You don't always have to pay a professional; there are a lot of help all around you. Take a free class at a local community center, maybe the local colleges offer free assistance and don't forget any friends or family members that are where you want to be. They can be a great tool to help you with your finances. Take one day a month, sit down with them, learn what has worked for them and see if it can benefit you. They can look over what you have been doing and give you tips and advice on how to proceed. You can also check to see if your bank or credit union offer some help with your finances.
Financial freedom is not for the weak of heart, it takes motivation, planning and taking actions to ensure you have the life you deserve. Managing your finances is essential to living the lifestyle you deserve. If you feel like it takes to much work to keep up with your finances, try keeping up with bills you have no income to pay.
Spend at least one day a month going over your spending and budgeting your accounts. It will do wonders for your lifestyle and drastically improve your financial status.