If you feel like you are constantly living paycheck to paycheck, digging yourself out of one financially messy situation after another, this is the year to get your life back on track with your finances.
#1 Check Your Transactions Every Day
The first thing you need to do is get in the habit of seeing what you are spending money on. Spend just a minute or two each day quickly looking over your transaction statement for your bank and any credit cards that you use. This will allow you to notice any issues with your bank or credit card right away, allow you to see how you are spending your money, and allow you to check-in with yourself to make sure that you are on track with your financial goals.
#2 Record How You Spend Your Month
Take a month or two, and categorize every purchase that you made. You can do this using receipts if you save them or by looking over your bank and credit card statements if you do not use cash that frequently.
Look at every purchase and put it into a category. Some basic categories include necessary home bills, subscriptions, food, transportation, going-out, and fun money. Make additional categories as necessary based on your spending habits.
#3 Develop a Budget
Once you look at how you spend your money, you can identify areas where you are overspending and figure out how to cut back. You want to cut back so that you can save up money every month. You want to be able to build up a personal savings account for emergencies, and you want to be able to start paying off your debt. Developing a budget will help you towards those goals.
#4 Determine Which Debt to Pay off First
Next, you need to determine which debt to pay off first. Some people like to start with getting rid of their smallest debt first to gain a feeling of accomplishment. Other people like to get rid of their debit with the highest interest first so that they reduce the interest that they are paying on loans. The key is to identify a debt and place extra money towards paying off that debt every month.
#5 Set Specific Goals
Make sure that you set specific spending goals. For example, set a goal to pay off a certain debt by a specific date. Or set a goal to save a specific amount each month. The key is to make long-term goals that you can break down into smaller chunks that you can work towards each month. Write these goals out somewhere where you can see them. You may want to make yourself a tracker so you can see your progress towards these goals each month.
Contact a company like Advisors Financial Planning Group LLC for more information and assistance.