So you want to save more money, pay off debt, or just stop spending $60 every time you step into Target. But how do you really get started managing your money?
Keeping track of your finances doesn’t have to be as complicated or overwhelming as people always make it seem. You really just need to create a solid plan that puts you one step closer to your goals with every paycheck. So, how do you do it?
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What are your money habits?
Before you can change your money habits you have to figure out what they actually are. This first step is going to hurt, but I promise it’ll be worth it!
The best way to figure out what you’ve been spending your money on is to sit down and take a look. Print out your bank statements for the last three months. Look at where you’re regularly spending money and how much of it is on needs vs. wants. You will probably be totally shocked at how much you really spend on things you don’t need.
This is usually pretty eye opening for most people and can be a good way to get yourself motivated to start making some changes.
So how do you start making those changes? Let’s go through the steps you should take to start actually managing your money instead of letting it manage you!
Create a budget.
I know you’ve heard it before – but writing out a budget really is the best way to manage your money. I like to look at a budget as an action plan for my financial goals. The main purpose of a budget is to just have a plan for what you’re going to do with your paycheck.
Think about it, you don’t just randomly throw your time and energy at any of your other goals without having a plan in place, do you? Your financial goals should have a plan too! The point when doing a budget is to make sure your money is going toward your priorities instead of being blown on mediocre coffee or your 20th pair of black leggings.
Set your financial goals.
Since your budget is meant to help you work toward your financial goals, you need to figure out what your financial goals actually are!
When you think about what you want for your future – what comes to mind? Do you want to own a fancy lakehouse? Do you want to change careers to do something that you totally love but pays less? Do you want to quit your 9 to 5 to work on your side hustle full time?
Whatever your goals are, you want to always keep them in mind when writing out your budget so you can stay motivated and know what you’re ultimately working toward.
I think saving money actually might be my favorite part of tracking my finances. You literally get to watch your money stack up in your bank account!
Saving money is important because it will cover your butt if something unexpected happens. I recommend saving an emergency fund of 1-2 months worth of expenses when you’re first getting started. This will cover most major emergencies that could come up or a few months of expenses if you suddenly lost your job.
This is probably one of the hardest steps because you may have never saved any money before. Most people don’t even have $500 saved to cover an emergency, let alone several months’ worth of cash. Breaking your spending habits to leave money sitting in the bank will be your first real test on how much you want to make a change.
Pay off debt.
I would say paying off debt is the step where most people give up. By the time a lot of us realize we need to do a better job managing our money, we’re already pretty far in debt. Most of us started our adult lives with student loans. It can seem impossible to pay it all off.
I promise you CAN if you’re willing to do the work! I’ve been able to pay off over $10,000 of debt in the past year – and if I can do it, you can too!
I like to pay off my debt using the snowball method. This means you write out a list of all of your debt in order from the smallest balance to the largest. Then you start throwing all your extra money at the debt with the smallest balance first. This method gives you your first few debt payoff wins the quickest, which will motivate you to keep going when you get to the larger balances!
Paying off debt is important because it frees you from continuing to pay for your past. You want to be using your money to fund your future instead!
Build additional income.
Not everyone wants to build a side hustle or start a business, but if making extra money sounds like something you want to jump on then you have some options!
Starting an online business has never been easier. Whether you sell digital products, start a blog or YouTube channel, or start selling on Ebay, there are countless options for making some extra cash.
I originally started Financial Flamingo as a way to hold myself accountable while paying off my debt. But once I realized I could make some extra money while also helping others I learned everything I could about monetizing a blog. I now run my website and YouTube channel as a business and I totally love it!
What does financial freedom look like to you?
Financial freedom is something most of us dream about, but not many are willing to work for. It takes time, patience, and discipline to make the changes necessary to manage your money well. Start creating a plan for your money and you’ll be working toward your financial goals in no time!
- Stop Settling for Life You Don’t Love
- The Basics of Sinking Funds
- How a Planner Changed my Finances
- The Complete Guide to Writing Your First Budget
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