Disclosure: Contains affiliate link. All opinions are mine.
No matter what season you are in your life, taking control of your finances is important. Whether you’re currently paying off debt, saving for retirement or planning for college expenses, financial literacy is essential. So, where do you start when you want to be intentional with your money?
1. Analyze Your Current Spending – You have to know how you currently spend your money to access your spending habits and set a budget. I recommend tracking spending for at least two weeks, but a month is ideal. Most people find this an eye-opening experience. Did you realize you spend $60 a month on coffee-to-go or maybe $200 on shoes?! Maybe you thought you only spent $500 a month on groceries, but really spend over $800. It’s essential that you know what you are currently spending to be able to budget effectively and make cuts as necessary.
2. Set Financial Goals – What are your goals and how do you plan to reach them? It’s much easier to stick to a budget if you know why you are doing it and what your goals are! Maybe, you want to pay off debt. Maybe, you want to have a $1,000 emergency fund. Maybe, you want to save up to pay cash for a vacation. Whatever your goals are, write them down and figure out how to make it happen.
3. Create a Budget & Stick to it – Once you determine your current spending and your financial goals, you can set up a budget. You need to make it realistic to your current spending, but also make sure the numbers add up and that you stick to the budget you create. You may need to take additional steps to make sure that you are spending less than you make. If you are drowning in credit card debt, you will need to examine your beliefs about money and change your spending habits to get out of debt and be financially free.
4. Consider a Financial Freeze – If you feel like your spending is out of control, consider a financial freeze and stop spending for a few weeks or even an entire month. Our family did a financial freeze a few years ago and it was a great experience, even though it was difficult. I learned so much about myself and my shopping habits and it changed how I shopped forever (for the better). Ruth Soukup wrote ’31 Days of Living Well & Spending Zero’ and talks about her experience with a spending freeze and how you can do it too.
5. Embrace a Frugal Lifestyle – Living frugally can help you reach your financial goals quicker. Meal planning, cutting expenses, couponing, shopping used are all ways to save money and take control of your finances. The little things you do to save money now add up big over time.
Ready to take the next step and reset your financial situation? These are the first steps to taking control of your finances.
For more detailed information about budgeting and take control of your financial future, check out my new book ‘The Extraordinary Art of Budgeting’.