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Getting My Finances Together: Where Do I Even Start?

If you’ve decided to take control of your finances, you might be wondering how to start and what are the first things that you’ll want to do. If this sounds like where you are in your life, first of all, congratulations! Deciding to take control of getting your finances is one of the smartest financial decisions you can make. Getting control of your finances is the first step towards achieving the financial life that you’ve always wanted.

Decide to start

Actually deciding to start is probably the most important step, so if you’re already there you are one step ahead of many others out there. An important next step can be to share your journey with others. You don’t have to tell the entire world all of the details about your financial situation, but there is value in not just keeping this all in your head. Remember that goals that aren’t written down are just wishes. So write your decision down and share it with a trusted friend or family member.

After you’ve decided to start getting your finances together, you will want to know exactly where you stand. One way to do that is to take a look at your credit report to know what information lenders are seeing about you. You can get your free credit score for free by using Mint, and you’re also eligible to get a free credit report once every twelve months from the three main credit issuers. Review your credit report carefully and make sure to challenge any mistakes or inaccuracies that are on your report.

Make a plan (and a budget)

Once you have written down your decision to start getting your finances together, it’s time to come up with a plan. Looking through your credit report can give you an idea of the existing debt and expenses that you have. Write down all of your monthly expenses and your monthly income.

Capturing your total income and expenses is the first step towards making a budget. Depending on your history with money, you may have a negative association with the word budget, but it’s important to remember that a budget is just a tool. A budget can help you to stop spending money on things that aren’t important to you, so that you still have money to spend on the items that are important to you.

Cut your expenses

Again, you’ll want to make sure that your budget is written down and tracked. If you try to keep it all in your head, you are only setting yourself up for failure. A tool like Mint can help with tracking your budget because it directly interfaces with your bank and credit card accounts. That way you can see all of your spending in one place, categorize it and see how you’re tracking against your budget.

Once you’ve been budgeting for a few months, you will start to see some trends of where you end up spending your money. Decide which items in your spending are aligning with your core values, and mercilessly cut the things that aren’t. Use any extra money each month to establish an emergency fund and get out of debt

Grow your income

Another thing to consider is that cutting your expenses is only one half of staying in your budget. While many budgeting guides talk about eliminating that daily coffee purchase or unused gym membership, that’s only one side of the story. There is only so much that you can cut out of your budget, while in theory at least, you have unlimited income potential. Start a side hustle or sell unused household items as a way to boost your income and get control of your finances.

It’s a marathon — not a sprint

Finally, remember that financial health is a marathon, not a sprint. Depending on where you are starting from, it’s likely that you will not completely eliminate your debt in one month or even one year. It will take time and so it’s important to remember that even at the start. And not all months will be the same — there will be days, weeks and months where you slip up and don’t make the optimal financial choices. This is another reason why writing down and tracking your progress can be useful. It gives you some history and context to know that if you have a bad financial day, you also have had many good days. Give yourself some grace and remember that tomorrow is another day. 

The Bottom Line

Deciding to get your finances together is one of the best financial decisions that you can make. Being on a sound financial foundation can help give you peace of mind and help you lead a stable life. Decide to start, write it down and share it with trusted friends and family. Gather your monthly income and expenses and start a budget.

Sharing your decision, journey and progress helps keep you accountable, even when the inevitable slip ups happen. When you do slip up and make a poor financial decision, the most important thing that you can do is acknowledge that it happened and resolve to do better tomorrow. One day at a time will guide you down the path towards financial freedom.

The post Getting My Finances Together: Where Do I Even Start? appeared first on MintLife Blog.

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