Managing your finances can be a difficult process and even overwhelming. Many people don’t do it at all, but rather just ‘wing it’ throughout the month. Sadly, that is what leads to many expensive complications that can hinder your financial health. In reality, if you take the next month and decide to focus your attention on fixing your finances, you will be good to go.
“If you outline a 12 month or 24-month plan, often times you will be discouraged,” says April Lewis-Parks, director of education at Consolidated Credit. “It’s not small enough to see progress right away. In a short amount of time, they can see progress and understand the different steps that need to happen to get to the next level financially.”
Here’s how to budget out your money through the month.
Day 1 – Day 5: Budget!
The first real step in fixing your finances is taking the time to budget. You really need to lay out what you’re working with. Look at your monthly income. Go through every dime that you spend each month. Use an Excel or Google spreadsheet to write down every bill and every expense, down to the subscription or coffee you get at Starbucks.
By doing this, you’ll get a clear picture of your financial health. Are you spending more than you’re making? Can you find a way to save money? Look for things to cut out of your budget to give yourself more room. If you’re not saving money, you’re setting yourself up for failure in the long run, especially if you lose your job or things go downhill.
Day 6 – Day 10: Saving!
The greatest goal you can have is to save at least 10% of your monthly income after paying for essentials. Put it into a savings account for a rainy day. If you want to truly be prepared for an emergency, the best word of wisdom is to have at least six months’ worth of expenses saved in case of an emergency.
Day 11 – Day 14: Determine Basic Changes
There are ways to cut down on your spending you may not even realize. There are a lot of small basic things you can do that add up to big savings. For example, switch out your light bulbs for something more efficient. Keep your heating and cooling during the extreme weather months set a better setting and turn off at night. Clean out your dryer vents. Cut the cable bill.
Day 15 – Day 17: Banking Needs
As you get through you month, you need to take notice at your banking habits. You might be paying extra fees you don’t realize every month. You can determine how your direct deposits every month are divided so a certain percentage goes towards bills, a savings account, and spending.
Day 18 – Day 20: Healthcare Needs
Your healthcare should be a priority. Sadly, many Americans skip this crucial step, mainly because they don’t think they can afford it. It can really hurt you in the long run. Also, there might be ways to lower your health care cost. Do the research. Look at your premiums. Consider what you’re paying out of pocket. It’s all part of the process.
Day 21 – Day 23: Manage Your Credit
A massive part of financial health is managing your credit. You should know what your credit score is. Having a bad credit score can make things a bit more expensive. Your monthly payments on things like a mortgage and auto loan can be less expensive if you have a good score. If you improve your credit, you can refinance your loans to make monthly payments cheaper.
Day 24 – Day 28: Manage Your Debt
If you have debt, the goal should be to pay it down as much as possible. Whatever you’re not stashing away for savings should be going towards your debt. If you want to gain financial freedom, you can’t do it sitting on a pile of owed debt.
Day 28 – Day 30: Prepare for Retirement
You might be thinking “Wow, this is more money I don’t get to spend,” but you really will get to spend it. It can take most of your working life to save enough to survive your golden years. Unless you want to work until you’re 80, start saving now.
