How to Get Your Personal Finances Back on Track

Financial stress impacts all of us. Whether you’re worried about saving for retirement or making your next rent payment, money stress can create a significant headache in your life. The good news is that it doesn’t have to be this way! If your finances seem completely out of control, it’s time to get back on track. By establishing financial goals, adopting smart spending habits, maintaining a realistic budget, and acting on professional advice, you can organize your finances and stop stressing over money once and for all.

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Consult a Financial Professional

The best way to get your finances under control is to talk to a professional. They can perform a detailed analysis of your current financial situation and help you build a plan to manage your money more effectively. Work with a financial firm that offers guidance beyond investing. Kiplinger notes that a great financial advisor will help you navigate all areas of your finances and map out the best path to your financial goals through saving, investing, and budgeting.

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Establish Financial Goals

Most of us have a few broad financial goals. Perhaps you want to buy a home one day, put your kids through college, pay off all of your debt, or save up enough money to retire at 60. While these goals are good to keep in mind, they do little to guide your actions. Clever Girl Finance explains that good financial goals should be detailed, measurable, and attainable. Set short-term goals with deadlines that you can immediately work towards.

Working backward from your long-term goals is a great way to break them up into bite-sized tasks. Say you want to buy a home. Find out how much money you will need to save for a down payment so you can create monthly and weekly savings goals. This is also a good time to explore your loan options and check your credit score!

Maintain a Household Budget

With a solid budget, you should know exactly how much of your income you can set aside for your goals. A good budget will prevent you from spending money on things you don’t really need and help you save up for the things you really want. The first step in creating a household budget is knowing where you stand.

Use Apps to Keep Track of Spending

A personal finance app can help you get your debt under control and find new strategies to budget, save, and still pay your bills on time. To better understand and monitor your debts, you can use software to find real-time information on what you owe for credit cards, student loans, mortgages, and more. This information can help you set up payment plans to start reducing your debt. Track your finances for a month or two to see where all of your money is going and determine how you can better use your funds.

Pay Yourself First

Even with a budget, it’s easy to let frivolous spending derail your savings goals. The best way to avoid this is to pay yourself first. As soon as you get your paycheck, divide your money between your different savings accounts. The Balance recommends treating your savings as a mandatory expense, like any other bill that you must pay. Once you’ve paid your bills and put money aside for your goals, you can use what’s left over for discretionary spending.

Curb Your Spending Habits

Reducing wasteful spending habits can help you stay on track to meet your financial goals. Money spent on unnecessary purchases adds up quickly. To trim the fat out of your budget, consider making some changes to your shopping behavior. Some areas where most people waste money include throwing out leftover or expired food, ordering takeout, frequenting dine-in restaurants, buying overpriced beverages, forgetting to return unneeded items, and buying brand name products when the generic version is just as good.

If you’re stressing about money, there’s a good chance your financial situation could use an improvement. There’s no better time than the present to get everything under control. Think carefully about your goals, come up with a realistic budget, remember to pay yourself first, and try to cut down on frivolous spending. Do all this and you’ll be on the path to financial security!

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Photo via Pexels

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References

“7 Traits Shared by Every Good Financial Advisor.” Kiplinger, published online Mar 12, 2019. https://www.kiplinger.com/article/retirement/t023-c032-s014-7-traits-shared-by-every-goodfinancial-adviser.html

“Examples Of Financial Goals.” Clever Girl Finance, published online Aug 26, 2021. https://www.clevergirlfinance.com/blog/examples-of-financial-goals/

“The 20% myth: What you really need for your down payment.” Chase Bank, accessed Feb 26, 2022. https://www.chase.com/personal/mortgage/education/financing-a-home/what-you-need-for-down-payment

“Budgeting 101: How to Budget Money.” Nerdwallet, published online Jan 13, 2021. https://www.nerdwallet.com/article/finance/how-to-budget

“Liabilities API – Retrieve liabilities and loan data.” Plaid, accessed Feb 26, 2022. https://plaid.com/products/liabilities/

“What Does It Mean to Pay Yourself First?” The Balance, published online Jan 14, 2022. https://www.thebalance.com/what-does-pay-yourself-first-mean-453696

“Study: The Most Wasteful Spending Habits Among Americans.” The Motley Fool, published online Sep 9, 2021. https://www.fool.com/the-ascent/credit-cards/articles/study-the-mostwasteful-spending-habits-among-americans/