I am used to being a financial nightmare. I used credit cards irresponsibly, never gave saving money a thought ( I didn’t even have a savings account), and the word ‘’budget ’’ was not even in my vocabulary.
While I was not proud of it, I filed for bankruptcy; the sleepless nights and constant calculations of my debt were overwhelming me and the idea that I could make it all go away was just too tempting to pass up. At this point, it finally hit me how off the rails I was in terms of my finances.
My story is hardly unique, and I think that most of us suffering from poor money management are capable of reform. We just need to become more conscious of what we are doing, educate ourselves, and work on developing better habits. As someone who has turned their financial life around, I would like to share some tips that have worked for me.
Think of Your ‘’Why’’
Whenever we clearly outline why we want to achieve certain goals, it gives us the fuel we need to make the choices that will help us reach those goals. After being horrible with money for so long, and living with that ‘’sick –to-my-stomach’’ feeling all the time about my debt and not having a single penny in a savings account should an unexpected problem strike, I vowed I never wanted to feel that way again.
I am a freelance writer, and while I have been blessed with a steady income for a while now, I know that could change without notice. Sometimes the uncertainty of my profession does gnaw at me, but now I have money to tide me over for quite a while should I be out of work. That makes me feel good. Think of why you want to be better with money; write it down and look at that list every time you feel tempted to go off track.
Work Out a Budget
This one is so obvious, it does not seem worth mentioning, but it is so crucial that I cannot possibly write this post without mentioning it. The word ‘’budget’’ definitely has negative connotations; it makes us think of sacrifice and giving up all the good stuff. But, it does not have to be that way.
My personal budgeting strategy is pretty loose actually. After adding up the fixed expenses, such as my student loan, I worked some really rough numbers of how much I thought was reasonable to spend on food and other items. This is the amount of money I keep in my checking account and the rest goes into my savings.
If I need to make a bigger purchase that is not factored in, like airline tickets, for example, I charge it and schedule a payment to hit once I am set to get paid again. This way, the money I put in savings that month stays right where it should be. I do not trust myself to transfer it back to my checking and just put extra in next month to make up for it. You do not need to account for every dollar you spend, but if you want to be financially responsible, you have to take a look at how you are spending your money, and put some sort of cap on it so you can build up a savings account.