It's too easy to remain in the dark about your financial situation. How much debt do you owe? What interest rates are you paying? And how much do you really need to be saving?
These little details tend to get away from us when we're just trying our best to hold our heads above financial waters. When you're hyper-focused on paying that next bill, making that next deadline, not over-drafting, you don't have room to set the goals that would really move the needle for you (and your bank account).
Stop hoping for the best when it comes to your personal finances and start getting super familiar with your situation. 💸
Get Your Finances In Check With 5 Simple Steps 💰
1. Review Your Monthly Statements
Start with where you are right now. Gather your monthly statements from the last 3 months and do a quick review of the changes you see. How often do you take money out of your savings account? How much are you putting away or investing? What are the most common expenses you see?
Your bank statements track many of the important details for you, so don't pass them up when they're sent your way. Set aside time to review the statements so you can really see where your money is going.
2. Find Out How Much You Owe
Many us of have a pretty rough estimate in our heads of the debt we owe and who we owe it to. But do you really know the exact number and where it needs to be going?
Get clear about everything you owe and who it's owed to so you can make a plan to pay it off. Once you have that number, choose a percentage of your monthly income that will go towards paying down your debt. Pro tip: set up auto-pay on your bills so they come out of your account without a second thought from you!
3. Know Your Interest Rates
Credit cards are a great time…until you have to pay them back. And interest is the sneaky little thing that's going to make you pay way more than necessary if you aren't careful.
If you don't know already, find out how much interest you're paying on your cards. Then calculate how much extra money that is per year — is it worth it? If not (spoiler: it's not worth it), make a plan for paying off those cards and eliminating that interest ASAP.
4. Create Specific Savings Goals
Got your eye on a new handbag? No matter what it is you're saving for, get specific about what it is and how you'll save the extra funds. Setting super-clear goals for your finances will help you stick to the habits that move you towards them.
Practice setting aside your savings in a place where you won't be tempted to withdraw from them. If you're saving for something big, it may be worth it to set up an extra savings account dedicated to that thing. Or you can use a service like N26 (shout out to them for being a past sponsor on AmyTV!) to help you divvy up your savings and assign them to different items.
5. Track Your Expenses
Finally, make a monthly routine of reviewing all of your expenses and tracking them in your budget. Do you have bills that change monthly? Keep track of the fluctuations. Did you spend more on take out this month? Make a note and keep it in mind when you're assessing your goals.
Be super honest with yourself about how much you spend. Leave the judgement at the door, and make a plan to adjust your habits if you feel it's right for you.
The time you set aside to review these expenses and adjust those habits will be the foundation of your financial success. If you don't know where your money is going, you can never save enough. Show up for yourself and move a little further each day towards your goals.
QOTD: What will you try first to help you master your personal finances?