Are your finances a mess? If you are living paycheck to paycheck it just might be time to get control of your finances. We put together 4 easy steps that will help you get your finances back on track.
1. Put a Hold on Unnecessary Spending
Lets face it, if your spending is out of control you will need to make some difficult choices. Your first priority should be to stop the financial bleeding by cutting unnecessary spending. Sounds easy right? If it were easy you would already be doing it. The best way to quickly limit spending is to use cash only until you can consistently manage your spending. A popular cash-only method is the envelope method in which you label envelopes with major categories of spending and place enough cash to fund that category for the month. When the cash runs out, thats it. The theory is that you will be forced to limit your spending to the amount in each envelope.
2. Get a Handle on Where Your Money is Going
The next step is to determine exactly where your money is being spent. The easiest way to find where every dollar is going is to use an online budgeting service from your bank or budgeting apps such as Mint. These applications automatically track and categorize your spending so you can easily see where your money is going and help identify opportunities to make cuts.
3. Create a Realistic Budget
Once you identify where your money is going now you can begin the real work of making permanent cuts in spending and planning to meet future financial goals. Your work in tracking your spending will help you to create a budget that will allow you to cut spending without drastically altering your lifestyle. Make no mistake, if you are spending more than you earn you will need to make some serious cuts that just may affect the types of activities you are currently enjoying. I would recommend starting with the budget that was created in step two above and set a starting goal of reducing spending by 10%. Once you can comfortably live with your new budget you can look for further opportunities to cut spending. Here is a great list of lots of ways you can reduce spending.
4. Look at Your Options
As with any plan you should carefully weigh your options and this is true for your plan to get control of your finances. Finding yourself short of cash to pay outstanding bills can be a difficult situation to deal with and there are several options to obtain the needed cash: 1) find part-time employment 2) sell unwanted items 3) borrow money from friends or family 4) tap emergency savings Each of these options has both pros and cons and you will want to give serious thought as to which option makes the most sense for you.