Getting, and staying, on track isn't always easy to do when it comes to finances. As we all know sometimes things happen that are out of our control and costs arise that we didn't plan for. And those unplanned expenses can lead us on a downhill road to debt. A road that can be hard to get back up from. The one thing we can control however is how we handle things before it happens, and the steps we can take to prepare for those unexpected occurrences.
It can take some time to get on track, especially if you're starting with some debt you need to pay off before you can really start saving. Just remember there is help out there if you're willing to take the first steps. If you have multiple bills that might be able to be combined into one monthly bill a place like debtconsolidation.com might be good place to start.
Whether you have debt or not below you will find three simple financial tips to help you get on track before, and even when something unexpected happens. These tips aren't everything you need to know about getting and staying on track, but they will help you at least get started in your journey.
1. Layout your current financial situation
Before you do anything else the first thing you need to do is start by laying out your current financial situation. Whether it be with pen paper or on a computer you'll want to list out all of your sources of income as well as all of your expenses. I'm talking about getting down to the nitty gritty. List every little penny you bring in each month and where it comes from. Keep the income that's guaranteed separate from income that isn't guaranteed. For example if your paycheck varies based on if you work overtime keep your base pay separate from your "bonus pay". This will help you when establishing a base income amount that you can count on for paying those pesky monthly bills. Then once you have all of that down do the same with every single penny that you spend each month. Again keeping separate things that are fixed expenses vs. spending on extras like fast food/shopping. Once you've done this you'll have a good picture of your current financial situation and how much of your income is needed for monthly bills and how much is leftover that can be utilized elsewhere.
2. Decide what you'll be doing with "extra" income
After you've determined how much "extra" income you have coming in once you're monthly bills are paid now it's time to decide what you're going to do with that money. Some people see it as money they earned and "deserve" to spend however they like to reward themselves for working. Others see it as money they need to save/invest for those unexpected occurrences I previously mentioned. I'm here to tell you it can be both! YES you worked hard and earned that money so you do deserve to reward yourself now and then. However, you have to to be smart about it. First and foremost you need to make sure you have a reserve set aside for those OH NO moments. This will be your "emergency" fund. Whether that be putting money into a savings account or investing another way there are many options out there to choose from. Even keeping it in a safe place at home is better than spending it just because it's there. Budgeting isn't easy for everyone and thankfully there are plenty of budgeting tools available online that can help you make good decisions for your personal financial situation.
3. Handle unexpected occurrences responsibly
Remember those unexpected occurrences I talked about before? Well more likely than not at least once in your life something is going to happen that's going to cause you financial turmoil. And when it does if you have your financial situation under control you'll be ahead of the game. If you have that emergency fund built up you may even be able to keep cruising along as if nothing ever happened. But if it's not quite built up enough, or the emergency is too big you're going to have to investigate other ways to pay those extra bills. This could mean borrowing money from someone, taking out a loan, or applying for a credit card to help ease some of the burden. I highly encourage you BEFORE you do any of those things to reach out to your debtors directly. Many times if you take the time to reach out they are willing to work with you. They want you to be able to pay off your debt as much as you want to get and stay out of debt. Ask about making payment arrangements and if they have financial assistance available. You never know what they have available if you don't ask! The worst thing you can do is ignore the debt and allow it to get out of hand. Don't ruin your credit because you didn't take the time to do your research.
Just remember once you start it might not be easy to do, or keep doing. You'll struggle at times, but you have to try hard to stick with it because in the end it will be well worth the reward of financial freedom. If you're looking for even more ways to improve your financial status here's an article I came across that might be helpful: https://www.consumerfinance.gov/about-us/blog/get-money-smart-25-tips-improve-your-financial-well-being/
