Life is chock full of unpredicted expenses that can set you and your family back. These expenses include health or medical bills, a forced move, an unplanned child, car breakdown, or a host of other expenses. There are several techniques to rebuilding your personal finances and to help you de-stress and live happily again, but it takes a significant degree of responsibility. Here are some tips to shaping up your bank account(s) and restoring your financial freedom.
Assessing your Credit
It’s easy to throw outstanding credit card payments on the backburner since you aren’t required to pay it all back instantly. But the kicker is interest charged on whatever you bought. Planning how to pay off a credit card is a major part of budgeting and long-term planning. Controlling impulse buys is at the base of this also. While buying a flashy new car will look good cruising down Main Street, figuring out how to finance that car is another story.
Listing and Deleting Automatic Withdrawals
Cancel all deductions that happen on a month-to-month basis. Of course this should not be done of minimum credit card payments, student loans, a mortgage, etc. Services such as Netflix, cable television, Xbox Live, or any other entertainment subscriptions should all be listed onto a sheet of paper. Figure out which services you can do without. If you can do without all of them and still find ways to pass the time, the more the merrier.
Treat Retirement as a Job
It may sound funky and harder to say than to do, but saving for retirement in your early 20s isn’t all that crazy. Setting up an auto withdrawal that takes $15 from each paycheck before you even see it is the most palatable method of building a significant retirement account. Companies that match the amount put into retirement is even better (it’s free money!). Think about it – put $15 away from each paycheck. That’s $30 per month and $360 per year. If the company is able to match that, think about how much money you were able to put away without even knowing it.
To Insure or not to Insure?
This is not a question. While it may be disconcerting, insurance is correctly referred to as a safety net of life. Losing everything you have because of faulty electrical lighting which leads to a burned down home while you’re away at work does happen. Taking out a homeowner’s or renter’s insurance policy isn’t one of the most glamorous purchases ever, but in the event a disaster does occur, you won’t be liable to pay 100% of those damages back.
Create a Plan!!
One of the most important parts of moving forward with financial success is to create a plan. You can meet with a financial advisor or take stock of where your money in going every month. You should aim to find out why saving money has not worked in the past and have a realistic budget for the future. Creating a plan is one of the best ways to move yourself out of the financial danger zone. A budget that works for you means taking all the small steps listed above and actually doing them. This plan may shift over the first few months, maybe you spend more on groceries when you eat out less, or spend more on gas with less Ubers. Knowing where your money goes, what is draining away, and how you can make improvements will give you ultimate control over your finances.
Refinancing your car or house are additional options to think through when charting your personal finance situation. Talk to a loan or financial officer who may be able to work with you to see if there are any other rational options at your fingertips. You don’t need an MBA to be financially sound, all it takes is a little patience and self-control.
This is a guest post by Avery Phillips. She is a freelance human based out of the Treasure Valley. She loves all things nature (especially human). Tweet her anytime @a_taylorian or comment below.