You’ve put off looking at your financial dumpster fire for as long as you can manage. Except now you’re facing an expense, job situation, or conversation with someone you share finances with that’s unavoidable. Will you finally get your finances on track, or will you slide back into old habits? In the story that is your life, this is often the catalyst that sets your future in motion.
There is hope if you’re serious about shifting your financial faux pas into intentional financial stewardship. Even the biggest credit card and loan balances can be managed and paid down into submission with the right plan. All you need is a willingness to learn and a mind open to some creative strategies.
1. Consider the Tools You Have Available
You may think your income is the only tool at your disposal, but that isn’t true. When used intentionally, financial products can be your sidekick in your overall financial management.
You may face a low credit score if you’re digging yourself out of debt. A credit builder card can help you establish responsible credit use over time.
Review the free tools provided by your financial institution that could help you on your journey. Credit monitoring, transaction alerts, and purchasing limits can be part of your financial toolkit. Please note such tools and deploy them when the time is right.
2. Take a Moment to Assess Your Situation
The bills start coming, and they don’t stop coming. As with death and taxes, bills also get the infinity icon next to their name. It’s easy to pay the minimum and avoid looking at your balances, but now’s the time to face your fear.
Log on to your accounts, pull out your paper bills, and check for any IOUs in your digital payment apps. Draft up a fresh Excel sheet and tabulate your total, taking note of balances and key dates. Note down interest rates, the priority of each debt, and any special factors to consider.
For example, an IOU to your best friend may be one you repay quickly for the sake of your relationship. Log everything to craft your debt reduction plan with a full data set.
3. Wrangle a Realistic Budget
The most beautiful budgets are often the most unrealistic. Assuming you’ll have ongoing monthly grocery and gas expenses is nearly impossible considering rising inflation and seasonal habits. Instead, do your best to anticipate ebbs and flows in your monthly budget.
Summer months may be filled with outings and opportunities to grill at home. Winter may call for gift giving and travel, which can quickly bust a flat budget. Review your habits, lifestyle, and preferences realistically and aim to prioritize expenses that mean the most to you.
Many experts recommend the 50/30/20 rule to bucket expenses among needs, wants, and savings. Apply this principle to your current costs and consider adjusting accordingly to balance both fun and your financial goals.
4. Comb Through Your Transaction History
Swiping is an involuntary movement, as digital payments are often the only way to transact. Because it’s so easy to set up automatic prices and subscriptions, transactions can slip through the cracks.
Price increases, incidental charges, and overlapping services threaten your financial goals. Review your transactions for accuracy, need, and pricing to ensure what you’ve been paying for is what you agreed to.
If there’s anything out of alignment, reach out first to your service provider to correct any erroneous charges. If your review unearths fraudulent activity, contact your card issuer’s fraud team to launch an investigation. By law, your liability for unauthorized charges is limited to $50, and issuers offering zero liability protection will waive even that amount.
5. Be Willing to Get Creative
Your primary job is the heavy lifter when it comes to funding your expenses and your financial goals. Unfortunately, your annual salary increase may barely keep up with inflation and price hikes for life’s essentials. When trying to improve your financial situation, you may need to be willing to deploy a different approach.
Taking on a second job during your off-hours, freelancing online, or offering your expertise for a fee can help. Review your skills against hourly or project-based work postings on sites like LinkedIn or Indeed. If you’d rather take the lead, post your availability on sites like UpWork or Fiverr to customize services and pricing.
While the idea of adding more to your plate may feel overwhelming, remember that this can be temporary. More work now can help you reach your goals faster. Plus, if you’re reducing your expenses and luxury spending, you may have more time on your hands. Use the time regained toward an hour or two of work and extra cash.
Craft Your Plan and Commit to Long-Term Financial Security
As you develop your plan, remember that financial stewardship is a long game. Your daily financial actions move you toward your goals, just like your daily workout routine supports your fitness.
Resist the urge to make sweeping commitments that sound good in theory but are unrealistic in execution. Instead, craft a plan that sets you toward both financial security and cash flow with some room for fun. When you do, you may find sticking to your new economic approach easier than you ever thought possible.