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It doesn’t matter how bad you think your finances are. How much debt you’re in. How much your income is. It is always fixable, as long as you put your work to it. Keep on reading this article where I will show you exactly how to take control of your finances like you have been doing it your entire life!
If you are reading this article, you most likely struggle to keep your finances in order. I get it! Money can be a pain point in our lives, but it doesn’t have to be. All you have to do to stop worrying about money is to take control of your finances and I will show you exactly what you need to do.
Changing your mindset
First of all, you need to get rid of any prejudices you might have regarding money and wealth. Clear your mind of old money-related concepts and find out if your thoughts regarding money and wealth are holding you back.
I have talked about limiting beliefs before and I believe it is a particularly important read to identify your own thoughts about this issue. Read the article and don’t forget to download the worksheet at the end to help you identify and overcome your limiting beliefs regarding money:
Identifying your mistakes
When it comes to personal finance, the most popular mistakes people make are:
- Not tracking their spending habits
- Ending up spending more that they realize
- Talking to friends and family for money advice, instead of reading a few reliable personal finance books.
One of the things that I hear a lot and really gets on my nerves is ant form of “if you want to save money you have to be frugal.” Or “Did you know you could save up to 700€ a year just by having coffee at home?”. Ugh! (insert eye roll gif here, right?)
It doesn’t make any difference in your wallet because if you are not responsible for your spending, you will end up spending the coffee money somewhere else, and end up feeling unmotivated from depriving yourself from a thing you love.
Here are my favorite personal finance books I have read and recommend:
Start a conscious spending plan
In other words, keep track of your expenses. Although it may seem daunting at first, all you have to do is to separate your income into four categories:
- Fixed Expenses: expenses like rent, or car insurance, or utilities bills, groceries, subscriptions, etc. Anything you can think of that you absolutely have to pay every month. Mostly take up to 60% of your paycheck.
- Savings: money saved for goals like wedding funds, or vacation funds, or even down-payment for your new home. Should take between 5-10% of your income.
- Investments: 401k, taxable investment accounts. Should take up to 10% of your income.
- Fun: The last portion of your income is reserved for fun spending on the things you love.
I have designed a free printable Monthly Budget Overview worksheet to help you keep track of your spending habits and take a look at where your money is going and where it should be going instead. Download it now and start filling it, I promise it won’t take longer than 10 minutes. You will get a clear idea of how you have been spending your money and what changes you should apply to maximize your income and start spending money on what you really love.
Quick tip: start by overviewing your last month spendings and apply any changes you see fit for the current month!
Eliminate debt fast
Find out exactly how much money you owe.
The scary green-eyed monster of debt most of us would rather remain hidden beneath the ground. But the truth is, the more you try to forget about it, the harder it becomes to eliminate. Gather up some courage and spend a few minutes finding out EXACTLY how much money you owe and which entities you owe it to.
Decide what to pay first.
I follow Dave Ramsey’s Debt Snowball Method here, because it is based on the fastest paying debt, regardless of interest fees.
You start by listing your debts from smallest to largest regardless of interest rate. Then, you set minimum payments on all your debts except the smallest. On your smallest debt, you pay as much as you can. Until you pay that completely and the money is freed to start paying your newly smaller debt. And it is just rinse and repeat until all debt is paid. Sounds easy enough and, really, the hardest but most crucial step is to figure out exactly how much you owe.
Just get it going, I believe in you!
In conclusion
Just like that, your money is accounted for, every penny you earn is spent where it should be spent and you don’t need to worry about money anymore. One less problem to keep you up at night, phew!
Start to take control of your finances today and gain back a bit of sanity! And don’t forget to download the totally awesome and completely free Monthly Budget Overview worksheet to help you along the way.
Let me know in the comments how you are taking control of your finances.
Until next time.
