Hello and welcome!
Today we’re going to answer a question a lot of people avoid thinking about: “how to get my finances in order”. You might also ask where you should start when getting your finances in order and what to prioritize. I have 5 actionable steps for you to take right now to gain an understanding of your financial situation and find out what you can do to improve it.
I get it. It’s not something people like to talk about and it’s certainly not something people
like to admit that they’re bad at. The truth is that most people haven’t been taught
in school at all about finances, money management, or what you really need to do to
get ahead in life.
So what do I do to get my finances in order? Well, here’s a little rundown of some key
actions you can take that will put you on a progressive path to success no matter what
situation you are in.
Create a Budget
Most people create budgets in their head, but the bottom line is this just doesn’t
work as a sustainable solution. Without writing things down to crystallize both
your income and your expenses, you’re really just playing a game of chance.
Write out all your monthly expenses and take a good look at where your money is going.
This may take a month or two of tracking your spending, writing down each expense every
day to get a clear picture of what your current lifestyle is costing you.
Compare your expenses to your income to see if you are living above or below your means.
If the case is that you are spending more than you are making then you will have to create
a new budget that meets your savings goals. Start with very basic tracking you can stick
to and find out what you can actually afford on your income. A budget is the most effective
way to determine your needs versus your wants and where your priorities should be.
Once you know your financial situation take the opportunity to reassess your financial goals.
What lifestyle can you afford? What lifestyle would you like to afford in the future? What
does that look like? What does it cost? Work backward from the goals you have to your situation
now. Decide what you need to save for and what you want to save for and factor in your savings
goals as expenses in your budget.
Start Saving More Money
Even if you don’t have a lot of extra money to save, you’d be surprised where you can
trim the fat. Sometimes something so small like packing lunch a few days a week or carpooling
to save on gas can cut your personal expenses by as much as 20 or 30 percent. Start with
your subscription services and entertainment expenses, any extracurricular activities you
can go without. Utilize the pay-yourself-first rule and make sure that your savings account
is paid before anything else. Make this easy by setting up automated transfers to your
savings account the day you know you will be paid. To further remove any temptation to spend
that money set this account up with another, online bank and don’t order a debit card.
Automate Your Bill Payments
Companies of all types prey upon customers that don’t pay on time in the form of late fees. So don’t let them take advantage of you. Make it a point to set up automated payments through auto-pay services or even use your bank’s online bill pay.
This is especially relevant to your credit card bills. Failing to pay results in large late fees on top of high-interest rates. Check your finances on a regular basis so you aren’t
surprised by automated payments. An easy way to keep track is to create a payment calendar. Include all of your upcoming expenses so you’re aware of money leaving your accounts.
Start Paying Off Your Debt
Even if it’s just a little. I know it sounds easier said than done, but most people just
get frustrated when they see the bills stack up and push them off to another month, and just
like those late fees that can add up, you’d be surprised how much interest compounds on a
balance that’s growing. Even the minimum payment plus an extra 20 to $50 would start to
whittle down those balances so that you’re saving more and paying less each month. Not to
mention the benefits of reducing your credit usage ratio that will positively impact your
credit score and enable you to take advantage of better interest rates and offers only
available to higher scoring customers.
Before you invest money or save an emergency fund this should be your highest priority.
I know that these things can be said to anyone without truly understanding the situation,
but even if things look impossible, just remember that only you have the power to stay
positive and make the little changes necessary to slowly release the stresses of being
Worrying never made a situation better. Stick to your plan and accept this as a situation of
life but not who you are as a person. Make one right decision at a time and turn your life around.
So that’s five power action items to start getting your finances in order. I hope
this has given you a positive understanding you need to take charge of your financial
future and finally take the steps to get your finances in order.
God bless and I’ll talk to you next time.
Judy Copenbarger is the Founder and President of Comprehensive Financial Services, based in Irvine, California.
She holds a Juris Doctor Degree, with a Taxation Emphasis, is FINRA Registered and maintains various Securities and Insurance Designations. Her professional expertise is in Estate Planning, Retirement and Education Planning.