Getting a Handle on Your Financial Situation
Posted at by ifydcat on category Personal FinanceMost of us have struggled with financial concerns at some point in our life. If you have ever lived paycheck to paycheck, you know how challenging and frustrating that can feel. The fear of not being able to pay your bills can be gripping and often can affect your ability to enjoy yourself and your life. If finances are something that you frequently worry about, resolve to take charge of your relationship with money!
One of the most important steps that you can take to help change your financial situation is to first get a very solid understanding of where you are currently spending your money. You may think you have a good idea, but a black and while picture of where all your money is going will likely surprise you. For one month, record each and every penny that you spend. Group your expenditures into related categories like food expenses, car expenses, entertainment expenses, etc., to have a clear idea of how you are currently spending your money. Often, when we look at our finances like that, it becomes clearer to us where the areas are that we can cut back or eliminate entirely.
Once you have an accurate idea of how you are currently spending your money, come up with a budget. Your budget should include every category that you are currently spending money in. At the start of each month, decide how much money you will spend in each category – how much will you spend on food? Entertainment? Clothing? You get the picture. At the end of each month, or as the month goes along, track how much money you have spent so far to see how closely you are sticking to your budget.
Once you have a good idea of how you are spending your money, you will be in a better position to be able to evaluate how you will go about paying off your debts. Write down all of your debts on a piece of paper. Many financial experts recommend starting with those debts that are lower and paying them off first – this will help give you a sense of accomplishment and pride. Come up with a detailed plan for which debts you will pay off first and how often you will make payments. Remember that the longer it takes you to pay off a debt, the more you will pay in interest. For this reason, financial experts recommend paying off your debts as quickly as possible, as you will save money in the long run on interest. Keep your list of debts and how you will pay them off in a place where you will notice it often, like your fridge or in your bathroom. This will help remind you that your goal is to be out of debt.
Having a secure grip on your finances will benefit you greatly. The peace of mind that you will get will be invaluable. Make the commitment to take charge of your finances today!