If you find yourself in the midst of a personal financial crisis, don’t panic. We put together a simple guide to help you recover from a financial rut and learn to be more responsible and successful with your money. You’re already taking a big step by reading this article and working to improve your finances and your life.
Track Your Spending
Sometimes it feels like your money is being sucked up by a vacuum, but rest assured you can track it down! First, consider all of the ways you spend money, like debit cards, credit cards, cash, checks, etc. If you use solely debit and credit cards then this will be easier for you. Create a spreadsheet with headers for the date, item/place and amount and enter all of your transactions for the past full calendar month. Then categorize the items into home (rent or mortgage, electricity, water), food and fun. Create other categories if you have extra items unaccounted for. Finally, find the total amount you spent that month and the total for each category. To find the percentage spent on each category divide the amount spent on the category by the total spend for the month.
Make A Budget
Since you have already tracked your spending for the last month and calculated the amount you spend on each category, the next step is finding your take-home pay. This is found by adding up your paychecks for one month. The next step is to pick a budgeting strategy and implement it. You can allocate an amount to each spending category and an amount to save for each month, but that may not always work for everyone. There are several useful and easy techniques that will help you create a budget, but the most important part is actually following through with it. Learn more about 3 simple budgeting techniques that will help you be more responsible with your money.
If you’re thinking that you’re spending more than you’re making or if you are simply not saving enough, it’s okay - there are things you can do to spend less money. Look through that spreadsheet you made and find costs that you can cut. If you think that there are none, then consider cutting cable, eating out, getting coffee out and monthly subscription services that you don’t really need. Imagine how much you could save if you stopped eating out and you started cooking your own meals and using coupons at the grocery store! If you’re not convinced, read about 9 ways you’re losing money without even realizing it.
Make More Money
If you have a job and you feel confident that you are working to your full potential, consider asking your boss for a raise or applying for a higher position that comes with a pay raise. If you don’t have a job then work on your resume and start applying to positions listed online. Consider getting a side hustle! You can get a part-time job on the side or even sign up to be an Uber or Lyft driver and spend your weekends earning some extra money. Look for things around your house or garage that you can sell. It all adds up, so if you’re committed you can earn more money.
Manage Your Time
If you’re thinking that you don’t have enough time to get a job on the side or work more hours at your current job, get up an hour earlier each day and see how much more you can get done. On top of that, learn how to be more productive with your time. If you can be more efficient with your time then you can get more done and make more money.
Deal With Stress In Healthy Ways
Perhaps the most important step that will get you out of a financial rut doesn’t even have to do with your finances at all! Finding yourself in this situation is stressful - we know it is. But there are many healthy ways to deal with your stress, like exercising regularly and taking a 10 minute break to walk outside during the work day. Challenge yourself to meditate or run everyday and before you know it you will be feeling better. Read this to find more ways to ease stress so that you can perform better, make better decisions and do more when YOU are feeling your best.
Commit To A Plan
If you’ve gotten this far then you are probably determined to improve your finances and get yourself out of this financial rut. Good for you! Decide exactly what your plan will be and write it down or save it on your phone. Look back at it if you need a reminder. Remember that financial freedom begins with good habits and you can start those good habits today!
What Not To Do
It may seem tempting to keep racking up credit card balances instead of taking stock of what’s happening and working to correct the issues. Beware that it’s difficult to dig yourself out of that hole when credit card interest keeps pouring in. Instead follow some of the strategies we’ve outlined and work to resolve the real issues.
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