How to Get Your Finances Back on Track
Like many people, you may find that your personal finances are not the way you want them to be, whether it is because of credit card debt, missed payments, or you didn’t choose the best savings account to keep your money in, we all have some form of money worries that cause us to shudder at the thought of what will happen in the future.
If you think that your money management is in need of a tweak so you can get back on track financially, then we will hopefully be able to provide you with all the information that you need today to make you have a brighter outlook.
Why Should You Care About Your Finances?
It shouldn’t come as a surprise that money is needed for pretty much everything in life, so if you are not putting money away for essential things such as rent, mortgage, energy bills, council tax, and so on, then you are going to find it difficult.
Not everyone can save money each week or month, but to achieve your financial goals you still need to be aware of what is important with your monthly outgoings and how you can make sure that you have enough money to cover them.
With the cost of living crisis looming over many, you are probably only thinking about what you need to cover at this current time.
Whilst that is essential, you also need to plan ahead and make sure that if anything were to crop up, e.g. illness, loss of job, car breakdown, etc., you can at least have some of it covered.
How to Get Your Finances Back on Track
You have decided that you want to put your finances in a better position than they were, good for you as this can be quite tricky.
Not everyone will have debt problems, but there will be times with every individual when a financial problem can creep up when you least expect it, even if it is a slight one, so now is the time to get back on track and get covered.
Get Yourself Organised
Organising your finances will help you set a course for the right direction you want them to go to.
Knowing exactly where your money is as well as how much you have in your bank account/bank accounts will stand you in better stead.
Review Any Outstanding Debts
You are able to obtain a free credit report to check your accounts, or you can check your account balances online to see what you have and how much you will need to pay out either in the coming months or overtime.
Your interest rates, monthly payments, such as bills, and balances will normally have autopay if you have set them up that way, or you may want to pay them manually, you will need to figure out which form would be best.
Check Your Bank Account Balances
See how much you have in your savings and checking account and see if you are on track financially to meet any money goals that you have coming up.
How much money do you put in your savings monthly? Are you taking out of it more than you are putting in? Why is that? Is there an area where you are feeling a drain?
Put All Your Paperwork Together
To ensure that you have everything in line, keep your insurance policies, physical bills, and bank statements together so that you can check on them when you need to and note any issues that may come up.
Set Yourself a Financial Goal/Goals
You probably didn’t realise how you go off track before, but it could have been because you didn’t take into account what you needed the money for and how you were going to spend it.
Here are some goals that you should think about setting money aside for as long as you don’t have other debts that may crop up again.
One of the most important ones when it comes to saving money.
To make sure that you are putting into it what you need to, it would be a good idea to automatically have a portion of your paycheck be sent into a high-yield savings account with a good interest rate, so if anything were to come up, you can use your emergency fund and not a credit card.
Take a look at a 529 plan to help you save money for your children and their future if they were to go to college/university.
It benefits from compound interest and can be withdrawn tax-free on the basis that the money taken out is used for educational purposes.
Putting around 15% of your income (pre-tax) has been said to be a wise choice by some experts, however, if you are not able to do that at this moment then just anything you can spare will help you.
Focus On Paying Off Your Debts
If you do have any debts, even if it is just one loan that you acquired a while ago, this can throw you off when you are trying to get yourself onto a solid financial track.
Here are some strategies for paying off your debt –
Debt Snowball Method
This means paying off your smallest debts first.
Paying off debts that have the highest interest rates first.
This is where you consolidate your debt into one loan, which is great for those who have good credit as they will be able to get a low-interest consolidation loan.
With bigger debts, e.g. buying a house or a car, then these can be unavoidable, so they will take longer to pay off, meaning that you will need to focus on the long-term goals for these instead of what you can do right this instant.
Re-Think Your Current Budget
We all have individual circumstances that change how we spend money, but, if your budget is draining you more than it should, it is time to take a look at it and see exactly why it may be a problem for you.
To help you re-tune your budget, here are some strategies that may be able to help –
Reduce Your Spending
Easy to say, but not exactly easy to do, especially if you have specific things that you have been buying.
Instead of thinking about it as cutting out things that make you feel happy, take a step back and look at what you currently buy.
Can you get it cheaper somewhere else? Are there deals you can utilize? Can you wait until later?
This can help you make a change to your spending habits.
Improve How You Pay Bills
You may want to start automating your bill payments so that you are never late which can incur a late fee in some companies.
Using the envelope method could benefit you, this is where you set aside your monthly spending in an envelope when you need to, to help you with keeping to an exact amount this will be great for when you want to be mindful of what is going out/coming in.
Seeing how much you have and what you will be spending it on can make you a lot more mindful about where your money is going.
Don’t Get Too Caught Up
Some people who are trying to sort out their finances can go in the completely opposite direction when creating goals.
It is important to be aware of what you are spending and how much, as well as paying off your debts, but if you start to get too stingy with your money and become afraid to spend anything, then you will find that this can affect you in day to day life.
Understand that you need to make this change and that it will help you in the long run, but know that it is okay to have a semi-indulgence every once in a while and that it is okay to spend a little bit extra on occasion.
After reading through, you should hopefully be aware of how to get your finances back on track and what the best method is for you.
Take care of what you are spending, and know that you don’t need to completely change who you are, just the way you have been spending and saving your money.
It will be tough to do at the start, and you may revert back slightly, especially with a complete overall, but with your goals in mind and extra help from your bank (who will also be able to provide targeted saving methods that suit your lifestyle), you can save the money you need to without feeling like you have gone too far.