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39% of Americans could not cover an unexpected expense of $400. With so many Americans living paycheck to paycheck, it’s clear that most are in financial trouble. Are you one of them?
It can seem outright impossible to fix finances when they’re in poor shape. But it can be done. You just need to know how to get your finances in order.
Take a deep breath. Financial literacy is a skill. And like any skill, it can be learned.
A few baby steps are all it takes to get started. You can reverse even the worst financial situations with a few simple strategies. It’s time to seize the future and learn about getting finances in order.
How to Get Your Finances in Order
Financial management is easier than you might think. It requires a bit of planning and discipline, but it pays off in dividends.
Here are 8 tips that can help repair any financial situation.
1. Create a Budget
Budgets play a pivotal role in safeguarding and promoting financial health. For many, a budget carries a negative connotation. But you can still enjoy nights out, fast food, and other indulgences.
A budget just ensures you enjoy these treats responsibly.
How do you create a budget? It starts with a look at your income and expenses. Once you discover how much money you have left after essential payments, you can allocate this cash towards debt and savings.
And of course, you can always earmark some as guilt-free disposable income.
2. Monitor Spending
So you’ve created a budget. That’s important, but a budget is worthless if you don’t follow it.
Monitor your spending habits to ensure you aren’t breaking the bank. This doesn’t mean you have to check your bank statement every day. But once or twice a week, it’s time to make note of your expenses.
During a checkup, you might notice you spent too much of your disposable income. Now you’ll know to taper your spending throughout the remainder of the month.
3. Automate Bills
If you have several bills and credit card payments, it can become overwhelming. You could miss a payment because there are too many to keep track of. Even paying a bill can become a nerve-wracking experience.
But it doesn’t have to be this way. Take some time out of your day to automate all of your bill payments. This will ensure they are paid on time.
4. Prioritize Saving
It can be tempting to spend your entire paycheck every month. But if you don’t save for retirement, it’ll cost you down the road. And retirement isn’t the only thing you should save for.
You’ll need an emergency fund, a car fund, and maybe even a vacation fund. What are you saving for? You’ll be more motivated to follow your budget if you establish an achievable goal.
Debt payment is important, but don’t neglect savings. It’s a crucial safety blanket for any household.
5. Repay Debt
When you can’t pay off your credit cards in full, high interest rates can trap you in a cycle of debt. Chip away at the balance with responsible monthly payments. When this isn’t enough, you do have other options.
You could refinance and consolidate your current debt. Although many strategies exist, most people rely on a personal loan. Yes, the trick to paying off your debt is taking on more.
But there’s a method to the madness. When you pay off your current credit card debt with a loan, your debt is consolidated into a single payment. Since most personal loans offer lower interest rates than credit cards, you’ll effectively lower the rate on your current debt.
Do you have to make a debt payment before your next paycheck? Easy loans are some of the best ways to get your finances back on track.
6. Perform a Monthly Audit
Are you making the most of your money? So many services come with monthly fees, it’s easy to lose track. Internet, cable, and phone bills can take a surprising and sizable bite out of every paycheck.
Perform a monthly audit every month and skim through your expenses. Look for recurring items you don’t use very often. You might find that you are paying a premium for unnecessary services.
It might be time to trim these items, find cheaper alternatives, or renegotiate the current cost. This is an easy way to increase your effective income.
7. Shop Cheaper
It’s no secret that if you pay less, you save more. Get in the habit of finding the best deals on your everyday expenses.
You could save $50 or more every month by shopping at a different grocery store or choosing off-brand products. Many of these are just as good as their more expensive, heavily-marketed counterparts.
Along with clothing and grocery stores, consider other monthly essentials. For example, are you getting the best deal on your car and health insurance?
8. Get a Side Hustle
For those in more serious situations, you may need to increase your income while you pay down your debts. Thankfully, the gig economy is in full swing. It’s easier than ever to grab an additional side job and make some extra cash.
As an added bonus, you’ll give your resume a boost and learn new skills. These can lead to better jobs down the road.
Finances Are Everything
So much of our lives depend on financial well-being. When you’re battling debt and a lack of savings, your quality of life takes a serious hit. But now you can pave a better future since you know how to get your finances in order.
The first step is always the hardest. Begin with a simple budget. You’ll get empowered to destroy debt and save more money than you ever thought possible.