There comes a time for most people when they realize they need to get their finances in order. Whether you make an excellent living or are barely scraping by, there are things you can do to ensure you are making the best use for what you have. The impulse to get your finances in order may be spurred by something big, such as the desire to buy a house or have a baby, or just the culmination of years of living paycheck to paycheck. Once you are ready to address your finances, it can be challenging to know where to start.
Do Not Overpay for Anything
You work hard for your money, so there is no reason to give it away. There are many ways, both big and small, that money trickles out each month. It is easy to recognize some of those ways, such as grabbing lunch out during the workweek, but there are other ways that you can cut spending that you may not have considered. If you have any loans, such as a mortgage or student loans, consider refinancing. Refinancing your student loans, for example, allows you to save money each month, and when you pay off the loans, you will have saved on interest payments. Subscription services you have not bothered to cancel, streaming services you barely use, and even the healthy produce you pick up at the grocery store each week and then pitch when it goes bad are all places where you may cut spending without feeling much of a pinch.
Track Your Spending
You can never really know where your money is going until you commit to tracking it. Some people enjoy tracking their spending, and there are certainly many apps available that make it easy, interesting, and rewarding. Even if it is not something you want to do forever, tracking your spending for a few months allows you to see where your money goes. From there, you can make choices about what you want to change and what you are happy with. When you first start tracking your spending, do not try to make any changes. You want to keep a record of your average spending. You may be surprised at areas where you spend more or less than you realized. Once you have a baseline of what is normal, you can start making adjustments.
It is easy to think that once you commit to your finances, that is the end of fun. The point of getting a handle on your finances is that you can still have fun and your fun can be guilt-free. Once you know where your money goes, it makes it much easier to set both long and short-term goals. If you know how much you are spending, and you cut out frivolous spending that you do not notice or enjoy, you have money to devote to travel, self-care, or other indulgences. Getting your finances on track does not have to mean devoting every extra penny to saving for retirement unless that is what you want to do. Understanding your finances allows you to spend your money more intentionally.