Everybody experiences financial stress at one time or another. Unfortunately, it is hard to live a normal life when financial strain is overwhelming you. You know you have to get on track before your finances overcome you, but knowing where to start can be difficult. Here are some tips to get you on the road to financial recovery.
Budget your spending
Don’t spend more than you bring in. A budget will tell you what this amount should be. Make a list of every expense you have each month, add it up, and subtract the result from your total income. That is what you have left to spend. If you end up in the red, you need to think of ways to cut back.
Some people have never tried this: put a portion of your paycheck, no matter how small, into a savings account. It is even easier if you have it withdrawn electronically from your checking account each payday. Every little bit adds up, and soon you won’t even miss the small deduction. Everyone should have a savings account for emergency situations, such as medical emergencies and car repairs.
Pay off credit card debt
Get rid of all credit card debt, and then close the accounts. If you cannot pay them all off at once, pay one off at a time, and watch your monthly output decrease. If you have some self-control, you should keep one account open in order to keep building credit history. Only consider this if you can pay it off in full each month.
Invest your earnings
If you have any money to invest, do so. Whether you invest in your company’s 401k, gold, silver or art, you can earn money for your retirement years. Many people fail to provide for their retirement, and end up living on little or nothing. This can be prevented by planning ahead.
If your employer offers a 401k plan, be sure to invest. Your contributions come out of your pre-taxed income, and many employers will match a portion of your investment. This is a sure-fire way of putting money away for those “golden years.”
Reduce your expenses
Periodically review your budget to see where you may be able to cut back. If you spend too much on groceries, consider clipping coupons to save money. If you eat a lot of fast food, you can get your wallet healthier, as well as your body, by cutting that out. Join a carpool to work to save on gas. There are always ways to cut back on spending.
Keep financial records
Always keep your receipts, and keep a monthly inventory of your spending. Most people do not realize how much they spend until they do this. Every latte, work lunch, manicure and new outfit adds up to what can be a bundle if you aren’t careful.
Once you gain control over your personal finances, and get some savings in the bank, you will feel less stress and anxiety over money. You will be able to see the future more clearly, and you will enjoy it more, knowing you have the security you need.