It’s a new year with new promises and opportunities. There is no better time to commit to improving your finances! All you need is the right mindset, the will to change and the tips I’m about to share with you. They are not only easy, but can also be seamlessly integrated into your busy life. So here are 3 easy steps on where to start to take control of your finances.
1. Start Where You Are
The best place to start is where you are right now. Sometimes we put things off because we are waiting for the right time, but there is no such thing as “the right time”. The BEST TIME however is now. Get a notebook and write down “In 2022 I will achieve my financial goal…” then complete the sentence with your goal for the year. It does not matter what you do for a living, how old you are, or the mistakes you made in the past. The objective is to write that goal down and stick to it.
Hesitation, indecision and procrastination are the killers of dreams. Don’t let these habits hold you back. If you want something in your life to change, you have to GET UP and change it. That means being aware of the bad habits that affect your finances, being aware of your lack of financial knowledge, and wanting more for yourself (and your family). Regardless of where you are in life, you can turn your finances around. When you start to believe it, you’ll take action then take control of your finances
2. Evaluate Your Situation
Once you have committed to taking back control of your finances it’s time to take inventory. This means taking stock of your income, expenses and debt. List all your sources of income including those from part-time jobs, investments and side hustles. Then lists all your expenses. Literally, ALL your expenses, as we’ll be using this number soon. A simple way to complete this task is to access your bank statement and note all your withdrawals. Finally, lists all your debts. These are your car loans, outstanding credit card balances, outstanding medical balances, student loans and retail/furniture loans.
Now, we need to make all the aforementioned numbers make sense. Subtract your expenses from your income. If this number is positive, it means you’re saving some of your income each month. However, if this number is negative, you’re actually spending more than you earn. If you’re experiencing the latter, it is urgent that you cut back on your spending. A budget is the best tool to use to do this. Here are some helpful tips to keep in mind when budgeting:
- Be consistent – Your budget only works if you work. The more consistent you are the more results you will see
- Track your expenses – tracking your expense weekly will keep your budget at the fore front of your mind so that you do not overspend
- Be patient – you are making a lifestyle change and it may take some time for you to adjust to the new restrictions
- DON’T GIVE UP – the moment you give up on your finances is the moment you give up on achieving a better life for yourself. Your hard work will pay off. Just keep at it!
Debt is one of the number one reasons so many young professionals can not get ahead in life. There are general do’s and don’t that you have to keep in mind when you decide you want to take on more debt.
| What To Do | What Not To Do |
|---|---|
| Make timely payments | Ignore your debt |
| Monitor your credit score | Making minimum payments |
| Pay more than the minimum | Taking out too much debt |
| Have a maximum of 2-5 credit cards | Having an excessive amount of credit cards |
For more tips on how to manage your debt like a pro, read this [Effects Of Poor Debt Management In Your Twenties].
3. Take Action
Now it’s time for you to take control of your life! Set a savings goal then use your budget to track your savings. Start implementing strategies to improve your savings. Maybe you want to decrease your expenses, pay off debt early or increase your income. Whatever route you choose, be consistent and determined. Change will only come if you put in the effort. Once you’ve reached your savings goal it’s time to start thinking bigger. It’s time to start investing.
There are numerous instruments out there for you to invest. Be sure, however to educate yourself before you make any trades. Learn about the different investment options. Read about the economy, current events and foreign affairs. Listen to expert opinions and get involved in the conversations. Replay the company’s earnings call and read what analysts are saying about that company and/or industry. Visit the SEC website and become familiar with financial statements then learn how to analyze them. One of the surest ways to build wealth is through investing. Luckily there is a plethora of options out there for investors of varying degrees of experience.
Final Thoughts
I admire anyone who is willing to do what it takes to change their lives. These are the steps that I took to change mine and let me tell you it is worth it. The fears and uncertainty that you’re feeling now is temporary. And if you need an extra dose of encouragement, contact me and we’ll work it out together. I hope these steps help you take control of your finances.
Join the family of over 700 readers by subscribing below!