Your finances determine many important things in your life such as where you live, how you live, and what you’re able to do. So, it is very important that you get control of your finances, rather than letting them control you. Here are a few steps you can take today to start taking back control of your money and get on the path to creating peace of mind.
1. Start tracking your spending. The first step you need to take when trying to regain control of your money is to find out how you’re managing your finances right now. Where does your money come from and where does it all go? You may be surprised to learn that how you think you are spending it is often different than how it is actually spent.
To find out where your money is going, begin tracking it today. Your tracking system can be as simple as a notebook page with columns, or you may want to set up a software program to help. Whatever system you choose, write down all the money you spend as soon as you spend it. Don’t let guilt keep you from making entries. This step is meant to help you find out the truth about where your money goes, not judge your spending habits.
2. Set up a budget. If you don’t think you can follow a budget, reverse you thinking and think of it as a spending plan, instead. To get your finances on track and start saving, you will need to spend less than you make. Write down where your money is coming from and on what dates you are paid. For most people, this is pretty simple, as there is only one source of income. Then figure out how much of that money is spent on bills and other necessities of life. Write down how you will spend the remainder.
This is where you may begin to see that you need to cut out some expenses so you can stay within your budget guideline. Remember to plan ahead and put money aside for larger purchases. Your needs will undoubtedly change every few months, so review your budget or spending plan on a regular basis.
3. Start saving. Most people aren’t accustomed to saving. They spend their money as quickly as they get it. To begin saving money today, contact your bank about arranging a regular automatic transfer from your account. Saving 10% of each paycheck is a good goal to strive for. While you’re getting used to the idea of saving, you may want to start out by saving 5% of each paycheck and work your way up.
4. Put away your credit cards. If you have your credit cards with you when you go shopping, you will probably use them. Duh! Eliminate your credit cards as an option by putting them away or even “hiding” them from yourself. If you remove them as a temptation, you will force yourself to live within your means by spending only the money in your bank account, or the cash in your wallet.
5. Ask your credit card companies for lower fees. Pick up the telephone and ask your credit card companies if they can work out a lower rate for your credit cards. Usually they will try to help you because it hurts both you and the credit card company if your debt goes to collectors. A lower rate means it will cost you a little less to carry the balance while you are working to pay it off.
You can gain a lot more control over every aspect of your life once you can gain control of your finances. By following the above steps, you will be on the way to getting that control.
Thoughts?
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