If you’re feeling stressed out by your bank account, make 2019 the year to get back on track financially. Most people have been overwhelmed by finances at least once in their life; some are even stuck in the rut for their whole lives! Whether it’s an issue of overwhelming debt or a lack of liquidity, viewing your personal finances in a simplistic and realistic way can get you back on track before you know it.
Sometimes just a simple phone call or ten minutes with a pen setting a budget and realistic goals can mean a world of difference for your stress level. In just a few simple steps, someone can go from overwhelmed and stressed out, to content and working on financial goals.
Acceptance and Honesty
Whether it’s a near-empty account or debt up to your eyeballs, most of us would rather distract ourselves with other things than take a look at the hard truth. If you want to get back on track financially, take a look at all your current debt, income, and accounts and accept that that’s your current state. The good news is that this is your current state, and not your permanent one!
You can take steps today to improve where you’re at, but that takes a good honest look at the situation.
Another important thing to consider is the difference between unnecessary debt and necessary debt. Necessary debt can be considered something like a mortgage or even a manageable car payment.
“While I encourage people to save 100% down for a home, a mortgage is the one debt that I don’t frown upon,” said financial guru Dave Ramsey.
Unnecessary debt is things like credit card bills and other small things that you may be stuck making minimum payments on.
The quicker you can organize your payments and debt, the quicker you can have peace of mind. If applicable, you may even consider a debt consolidation program.
Set a Budget and Make a Plan to Tackle Unnecessary Debt
Now that you’ve taken an honest look at your finances, it’s time to look at your spending habits. If you’re enrolled in your bank’s online banking program and regularly use your debit card, that can be a great starting point for figuring out where your money is going. Trimming the fat is an important step in getting financial peace of mind. Often its recommended to avoid eating out and buying coffee out, but other things can be a surprising source of account hemorrhaging as well.
If you find that your spending $100 each week at the grocery store, simply making the effort to cut that down to $75 will end up saving you $100 each month. That money saved can be put to good use in tackling debt or going into an emergency fund!
Try the SMART Goal Setting Method
The SMART Goal setting method is an excellent tool to use in personal finance and elsewhere in life. There are a number of worksheets online that make it easy to set your own SMART Goals. Every SMART goal should be Specific, Measurable, Achievable, Relevant, and Time-Bound.
With SMART goal setting, you can set short term goals and long term goals. In just a few months, your situation can improve tremendously, and in the long term, a well-kept budget can lead to a comfortable retirement.