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When it comes to personal finance, it can sometimes feel overwhelming. This is especially true if you don’t know where to start. Trying to tackle your finances in one swoop is bound to lead you to failing.
Not because you can’t do it, anyone can do this, but it’s a lot to do in a short period of time. Just like with any big task, it’s good to start small and break it down into more manageable parts.
This is exactly what I recommend you do, if you’re just starting out at getting your finances together. There are a couple things that you can easily do in one day to immediately get your finances to a better place.
1. Track your expenses to manage your finances better.
The very first and most important thing to do is to start tracking your expenses. If you use any kind of card, you can easily pull your bank statements and look at the previous month to see where your money went.
I always suggest printing it out and highlighting for each specific category. For example, groceries, eating out, shopping, personal care. You can really make any categories you want and works for you. No one set of categories works for all and your budget will reflect the things that you value once you cut down on your expenses.
If you have always used cash, you can either use your receipts from the last month or start tracking your expenses today. Ideally, you want a month of expenses to get a realistic picture of how much money you spend in a given month.
2. Write out a draft budget to manage your finances.
This is going to be life changing for you once you create and execute a budget. Drafting it out for the first time can be overwhelming, but just get it down somewhere.
You can do this on paper or on the computer, whatever works best for you. If you subscribe to my newsletter, you’ll get my PDF to help track expenses and budget for free. If you’re more of a computer person, you can purchase my Google sheet templates that have all the formulas in for you already!
The important part about your budget in this stage is to just get your income and expenses down on paper. Write out your actual budget, don’t write out the one you want to have. Write out your actual income, write out the actual amount you spent on Chipotle. This will be eye opening and why it’s so important.
Once you have a draft of your budget, you can start looking at habits that you have. I wouldn’t suggest making any drastic changes, but maybe a few to give you some extra cash flow. Find the things you don’t value as much and cut those first. If you’re a follower of KonMarie, then you’ll get the whole sparking joy thing. Anything that doesn’t spark joy just has to go!
3. Emergency Fund.
If you don’t have an emergency fund, you need to get one set up ASAP! An emergency fund is arguably the most important thing when it comes to managing your finances. Without it, you set yourself up for disaster in the event of the unexpected.
I always recommend you to have at least 1 month of expenses saved up at any given time, at a minimum. Once you have a month, I’d switch to focusing on debt, but still contribute to your savings. Personally, I contribute $25-$100 every month depending on where I am in life. Right now, there is a lot of unknowns for me in my future, so I’m contributing more while paying off debt.
I recommend having your savings somewhere that is easy to get to, but not too easy. For example, I have an account with an online savings bank called Ally. I prefer it to a regular bank because it earns me more interest and is a little harder to get to. If I’m going to be having money sitting around, I want it to be working for me!
I suggest looking into savings accounts today and choosing where you want to keep your emergency fund.
Your finances won’t change today, but they can start to change today.
Finances are an everyday thing, not just a set it and forget it. You need to actively be doing something for your finances everyday, even if it’s just tracking your expenses or updating your budget. Your finances are a never ending journey, but it’s great to get started on these 3 things today. If you are trying to get your finances together long term, I have the perfect guide to get you started! What steps have you taken recently to get your finances together?