How to Get Your Financial Life Back on Track
By taking a close look at your spending habits, using a budget, cutting spending and setting financial priorities, you can get your financial life back on track. If you make reviewing and managing your money a lifetime habit, you can afford to pay your household expenses even after you retire.
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Instructions
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Create a budget by listing your monthly net income, which is your gross income minus deductions like taxes, garnished child support payments and automatic health insurance premium payments. You can use a plain sheet of paper or a spreadsheet to create your budget. In addition to listing your net income, also list recurring expenses (e.g., utilities, rent or mortgage, groceries) you pay each month.
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Set priorities on purchases and expenses. Number or alphabetize your monthly expenses with the lowest number or letter (e.g., 1, A) designated as expenses you consider necessary. Highlight expenses you can eliminate. For example, you might decide to forgo a premiere cable channel, a gym membership or getting your nails done at a beauty salon. Stop making these purchases until you get your financial life back on track. If one or more of the expenses is a service you receive, ask the service provider to disable your service before you stop sending in payments.
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Study and learn about the stock market to prepare to start investing a portion of your money. If you're not comfortable making investment decisions regarding tools like mutual funds and equities, consider working with a financial adviser to make your investment selections. You can also join investment clubs or invest through your employer's 401k or individual retirement account (IRA) plans. Review your investment statements regularly, at least monthly. Should stocks you're invested in start trending downward or lose money, reallocate those funds and invest in stocks that are yielding positive returns.
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Read brochures and information packets associated with your bank accounts to understand fines and penalties related to the accounts. Additionally, read details related to fines, penalties and interest rates on any credit cards you possess. For example, make sure you know if your bank charges an overdraft fee on bounced checks (e.g., $30 for each under-funded check you write), a monthly maintenance fee to manage your account (e.g., $15 a month if your account dips below $1,000) or a fee if you use more than a certain number of checks each month. Also find out if you pay a higher interest rate for taking a cash advance against your credit card. Because these fees and penalties can add up over time, costing you hundreds of dollars a year, review your bank and credit card statements before writing checks and withdrawing money.
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Shop with coupons, during specials or sales, and at stores that honor double coupon days. You can stay aware of upcoming sales and discounts on select store merchandise by signing up to receive email notifications from retailers you shop with. Retailers also place sales brochures inside their stores. Pick one up before you start shopping to see if products you want are on sale. Additionally, consider buying in bulk when you go to the grocery store.
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Pay off credit card debt and avoid getting new credit cards until you get your financial life back on track. If you do decide to get a credit card after you pay off your debt, look for a card that has low interest rates, fines and penalties. You can also get a credit card that allows you to save money when you make certain purchases like renting a car, reserving a hotel room or dining at a restaurant.
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Purchase auto and health insurance. If you're employed, contact your human resources manager to see if you can get health insurance coverage through your employer at reduced rates. Should you get involved in an accident or experience a medical challenge, the insurance coverage could save you thousands of dollars, depending on the severity of the accident or medical challenge.
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References
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