Wouldn’t it be nice if there was a magic formula or one easy trick that made it so you never had to worry about money again? If you’re tired of constantly being stressed out about money, then maybe it’s time to get a hold on your personal finances.
There are five keys that can help you get control of your finances. Follow these five steps consistently, and your financial problems will start to diminish–along with the financial stress that goes along with them.
Start with Goals
The first thing you should do is to write specific goals about what you want to do with your life and your money. Finances can affect many different areas of your life. Your goal to travel the world affects how you will plan your finances. Your goal to retire early is dependent on how well you handle your finances now. Homeownership, starting a family, moving or changing careers will all be affected by how you manage your finances.
Once you have written down your financial goals, you need to prioritize them. This ensures that you are paying attention to the ones that are most important to you. You can also list them in the order you want to achieve them, but remember for a long-term goal like saving for retirement, you should be working towards it while also working on your other goals.
Below are some tips on how to identify your financial goals:
- Start by setting long-term goals like getting out of debt, buying a home, or retiring early. These goals are separate from your short-term goals.
- Set short-term goals, like following a budget, decreasing your spending, or not using your credit cards.
- Prioritize your goals to help you create a financial plan.
Create a Plan
A financial plan is absolutely essential in helping you reach your financial goals. The plan should have multiple steps. A sample plan would include getting control of your budget, creating a spending plan, then getting out of debt.
Once you’ve accomplished these three things, you’ve freed up some major cash, and the money you free up from your debt payments can be used to reaching these goals.
At this point, you should decide what priorities are the most important to you. Keep steadily working toward your long-term retirement goals, but also start to focus on the most important goals you have set for yourself. Do you want to take an extravagant trip? Start investing? Buy a home or build your own business? These are all things to consider when deciding on your next step.
Your goals, along with an emergency fund, will help you stop making financial decisions based on fear and help you get control of your situation.
When creating a financial plan, remember these things:
- Your budget is key to success. It is the tool that will give you the most control of your financial future. Your budget is the key to achieving the rest of your plan.
- You should keep contributing to long-term goals like saving for retirement no matter what stage of your financial plan you’re in.
- Building an emergency fund is another key factor to financial success.
Stick to Your Budget
Your budget is one of the biggest tools that will help you succeed financially.
It allows you to create a spending plan so you can focus your money in a way that will help you to reach your goals.
A budget lets you decide how to spend your money. Without the plan, you may spend your money on things that are not important to you, but you want in the moment, and then wonder why you are never reaching the financial milestones you have set for yourself.
A few things to keep in mind: Even after you are out of debt, you still need to have a budget. It is easy to spend more than you make, and if you stop tracking your spending, you could slide back into debt.
If you are married, you and your spouse need to work together on the budget. This will help you to achieve your financial goals together and prevent fights. Below are some tips for married couples who want to create a budget together:
- Consider switching to an envelope budgeting system that uses cash for the difficult categories.
- Use budgeting software with a mobile app so you can enter spending in real-time.
- Planning ahead can also help you to avoid overspending.
This article was taken from: https://www.thebalance.com/manage-your-personal-finances-2385812