5 Steps to Take Control of Your Finances
Jan 20, 2024Read time - 3 minutes / Disclaimer
Today, let's review 5 steps to take control of your finances.
Having more control over your finances offers benefits like:
• Less debt.
• Lower stress.
• More savings.
Unfortunately, it's estimated only 32% of people use a budget.
Budgets Are A Hassle
The problem is, most people:
• Think budgeting is boring.
• Weren't taught how to do it.
• Are afraid to "see the numbers".
So, they do nothing.
After working in banking for 10 years.
I noticed—
The best customers watch their money closely.
Here are 5 steps to take control of your finances:
1. App or Template
There are many ways to track money these days.
It's a matter of personal preference.
Free Apps include:
• Honeydue
Microsoft also offers many free budgeting templates you can download.
They allow you more customization than a phone app.
2. Setup Your Budget
Pick a day and time to set up your budgeting app or template.
Yes, this is the most painful part.
But, it's a one-time thing.
Don't worry about perfection.
Any system that helps keep track of your money is better than nothing.
Once you input all the information, you're good to go.
3. Review Your Situation
Look at your numbers.
This can be painful.
For some, it's the realization their expenses are higher than their income.
You have some hard decisions to make if that's the case.
Don't beat yourself up if so.
Celebrate the fact you're taking the steps to improve your financial future.
4. Make Changes
Each person's financial situation is different.
Make the necessary changes best suited for you.
Person A may be OK with spending $1,500 a month eating out, while Person B may not.
The average person's highest expenses are:
• Food
• Housing
• Transportation
If you need to cut back, making changes in these areas usually have the biggest impact.
You want to have as much positive cash flow as possible at the end of each month.
5. Do Check-Ins
The 5th step is the easiest, deciding how often you're going to "check-in" with your budget.
Are you going to be the 30-minute-a-month person?
Are you going to be the 1 hour per week person?
There's no wrong answer.
Whichever you decide, set a reminder in your phone.
1 hour per month is a good idea for those just getting started.
Your income will change, and your expenses will change.
It's quick and easy to update an existing budget when this happens.
The more you do it, the faster and easier it becomes.
Conclusion
Budgeting involves 2 main topics, income & expenses.
People who get the best results focus on both categories.
Reducing expenses and increasing income provide double the benefits.
Having high amounts of leftover cash each month is the main goal.
That's all for today.
See you next week.
