Chances are you have read several articles on how to cut your grocery bill in half or how to save $5000 a year by making simple cuts. However, I am going to guess that you are still in a financial hole. Why? Simple. Those tips you read are what the writer has done, and when it comes to personal finances, the thing is that they are personal. They are unique to you and your situation. Here are a few tips to take control of your finances your way to improve your life, once and for all.
1. Record What You Spend: It is essential to keep a detailed record of what you spend. I am not going to tell you to stop paying $100 a month for a motorcycle membership subscription if that is what you love, but you must know where every dollar is going. You work hard to make money, don’t flush it away through unknown means. I want you to write down everything you spend for a few months. Track every dollar, even if it just buys you a $1 hamburger at McDonald’s.
2. Create a Budget: Now that you are more aware of where your money is going, make a budget. Many people hate making budgets. Why? They feel that it is too legalistic – too many rules. It is fine to hate budgets, but you must realize that when you have a successful budget, than you are successfully telling your money where to go. A budget also helps you see where you need to save and where you can spend.
3. Eliminate Debt: To truly have a secure financial future, it is crucial to eliminate debt. Don’t be fooled into thinking that debt is a good thing. Yes, it helps establish credit, but there are other ways to establish credit too. With debt comes interest rates. Therefore, you are paying money that you shouldn’t have to. Pay off debt as quickly as possible, starting with credit cards and student loans. Once you make leeway on your debt, avoid getting back in debt by using cash.
4. Save for Your Retirement: I don’t care how old you are. It is time to start putting some money, any money away for your retirement. Even if you are in your early twenties it is beneficial to start putting money away.
5. Have Money Set Aside Just for Emergencies: Dave Ramsey talks about the Murphy Law of bad things happening when you do not have money set aside. While this is not a cold, hard fact, how many of us can attest to the truth in it? It seems like bad things keep happening when you don’t have money set aside – i.e. medical bills, emergency auto or home repairs. However, once you get $1000-2000 set aside just for emergencies, life seems to settle down. You buy insurance for everything, why not create insurance for yourself with an emergency fund.
It does not matter how much money you make, whether $20K or $200K – these tips apply to you. Take control of your finances, no matter what situation you are in. It is the little steps that add up to the big steps.