Managing your Finances like a Boss
How much do you actually have?
The first step to managing your finances is determining how much money you actually have. And for some people, this might be negative! But it’s okay, by assessing your current situation, you are taking the first step to moving yourself into the positive.
Assessing how much you have means looking at what is currently in your bank accounts and how you owe on credit cards or other loans. Do you have an excess? Or do you have more debt? If you lost your job tomorrow would you be okay?
These are the kinds of questions that you need to ask yourself as you are sorting out your financial position.
How much do you need for your goals?
If you are looking to get a hold of your financial situation, you likely have some kind of goal in mind. Are you planning on buying a house, or a new car? A goal can be anything, even just having an emergency fund, or starting to save for retirement. Determining what the magic number is will help you decide what the next steps are in terms of saving your money. The earlier you determine what your goals are the better, because you will be less stressed about putting enough away in time.
Check out my post on ways to save more money!
Are your goals realistic?
Please take a second to consider if your goals are realistic. I am certain we would all love to be flying around in private jets, and driving Maserati’s, but a lot of times this is unrealistic. Sticking to unrealistic goals can end up being a letdown when you don’t end up reaching them. Instead, if possible, break your goals up into smaller manageable goals.
For instance, maybe you can designate $20,000 for a new car. Don’t limit yourself by saying “I want this specific vehicle” which you know to be over $70,000 when you have $5,000 in your bank account (unless you are willing to wait and save for 5 years to be able to afford such an expensive vehicle). You need to be able to live within your means to remain financially stable.
What is inhibiting you from your goals?
Do you have multiple credit cards that you don’t need? Do you have bad credit? Knowing what is inhibiting you from your goals will allow you to be able to know what you should tackle first. If you have tons of credit card debt, then working to pay that down should be made a priority.
This is a time to look at your spending habits. Take a day to go through your credit cards to see where your money is going. If you are finding that you spend quite a bit of money on eating out or going to the movies, then you will know how to fix this – by going less.
It is also a good time to assess if your bank is working for you. Certain accounts and products have a lot of fees on them. For instance, overdraft protection sometimes costs a monthly fee. If you are someone who is careful with money, then there is no need to be paying $5 a month for this protection.
Create New Habits
Now that you know what obstacles you face, start creating habits that will get you to your goals. This can be something as simple as checking your visa charges once a week. Regularly seeing what you are spending your money on will help you stay in check with your spending. If you are seeing most of the charges are for food, maybe reconsider going out for lunch so often and instead bring food from home. Another good habit to get into is to have small goals for yourself regarding your spending. Again, these can be as simple as going for a week without buying a coffee. Each time you reach a goal, not only will you feel good, you will also likely be saving some money.
Going through these steps will allow you to consciously spend and save your money in ways that are beneficial to you. You will have greater control, and subsequently less stress (and who doesn’t want that?!). Spending money is fun, but it is important to take a moment to ask yourself if you really need to be doing it, and what your motivations are for the purchase. We usually can function just fine on a lot less than we currently have.
I hope these thoughts were helpful. Let me know how you tackle managing your finances!