Personal finance is and always will be a touchy subject no matter who you are and what your situation is.
Many times we think that we aren’t making enough money to keep up with the lifestyle that we want to live.
It’s not just about how much money you make though.
What you do with your money and how well you take advantage of your time and effort are very important variables to consider as well!
To take control of your personal finance follow these 4 simple steps!
Table of Contents
Take responsibility
In many situations, the hardest step is the first one. And that definitely applies to personal finance.
When you’re trying to take control of your finances, accepting responsibility may seem like the easiest step, but it is often times the most difficult.
Your car breaks down. You get laid off. You need to take a trip to the emergency room.
Life is going to throw you all kinds of curve balls, that’s no secret. Those events can be directly to blame for many financial hardships.
I think we can all agree that no two situations are the same as well. Some people are luckier than others and life isn’t always fair.
How you respond to those financial curve balls though is what will determine which path you’re about to send yourself down.
It’s on YOU!
Experiencing any amount of financial stress should make you want to take control. Getting ahead and building up your savings should also make you want to take control.
Don’t sit around and wait for someone else to get your ducks in a row for you.
Take action!
The sooner you own up to your finances and take a hold of the reins, the better off you’ll be, and the sooner you can move on to the steps that will put more money in your wallet!
Set Goals
Once you’ve decided that you want to do something to improve your personal finance situation, you’ll have to set goals.
What do you want to accomplish in the next year?
Where do you want to be in 5 years?
What kind of life do you want for yourself when you’re older?
These are just a few of the many questions that you need to ask yourself when setting goals.
When setting short term goals, try to be specific. A year or two is not that much time in the grand scheme of things.
And even though your short term goals may change slightly due to life happenings, being specific will help you maintain focus and easily track your progress.
An example of a short term financial goal would be: I want to save $50 per paycheck over the next year to pay for a family vacation.
When setting long term goals, there’s obviously a lot that can change between the time you set your goals to the time you accomplish them. Therefore, it’s alright to be a little more broad when setting long term goals.
An example of a long term financial goal would be: I want to get to a point within the next 10 years where I have no auto loan payments and I can instead use money towards investing.
Track your Progress
Your goals will always be changing and as you get closer to accomplishing your long term goals, you can start to classify them as short term goals and have a more specific idea of exactly where you want to end up.
I think we can all agree it’d be nice to accomplish all of our short term and long term goals as fast as we can, but you have to live your life. Not just to get by, but to also enjoy it. That fact is exactly how we end up with short term and long term goals.
Staying on track to accomplish your goals is crucial, and the next step is the key to it all!
Develop a Budget
Developing a budget is the next step to take control of your financial life, and is where you finally get to look at some numbers.
Whether that excites you or not, it has to happen!
A good place to start when you are building a budget is the 50/30/20 budgeting rule.
The 50/30/20 budgeting rule is a widely known budgeting philosophy in the personal finance world these days.
It states that 50% of your after tax income should be spent on needs, 30% on wants, and 20% on savings and debt.
50/30/20 Budgeting Rule
Needs are classified as housing costs, groceries, insurance, utilities, etc. There may be other items you want to throw in this category, but if it’s not essential then it’s probably not a need. The bare bones of living is what you’ll include here.
Wants can include a wide variety of expenses. There’s the obvious ones like concerts, going out to eat, and new clothes. But literally anything beyond your basic necessities should be included here. That even means things like cable TV and name brand foods.
Items categorized as savings and debt include money saved for an emergency fund, investing in retirement accounts, credit card payments, etc. Something to keep in mind regarding debt payments is that your minimum payment is considered a need, but any payment beyond that is included in the savings/debt category.
Committing to the 50/30/20 rule will be a great decision for your financial success!
At the very least, I recommend using it as a starting point in developing your budget. Then make minor adjustments depending on what your financial goals are.
For example, if you want to engage in more investment opportunities, consider using less money on entertainment or living in a smaller, cheaper home.
Like I keep saying, everyone’s situation is different so don’t be afraid to deviate slightly from the 50/30/20 rule. Just beware that too many changes may defeat the purpose of budgeting in the first place and set you back.
Helpful Options
If you feel overwhelmed when trying to make a budget, it may help to meet with a financial advisor (most won’t even charge you to simply put together a financial profile) or explore online budgeting options.
A great online wealth management and budgeting tool available to people of all finance levels is Personal Capital.
All you have to do is simply link your bank accounts, retirement accounts, loans and any other financial assets and liabilities.
Then you are able to look at everything in your financial life on one screen as if all your accounts were combined into one.
There’s pages that look at your cash flow, investment portfolio, and budgets all while presenting the information so it’s easily understandable. The many graphs help out a ton as well!
It’s also completely FREE to use with no strings attached!
Personal Capital has been very useful in my ongoing journey towards financial success, and I know that it can help anyone that’s trying to create a budget on their way to taking control of their financial life as well!
Do Something About It!
It’s easy to talk the talk, but can you walk the walk?
Each step along the way to taking control of your financial life can get harder and harder, and requires more effort than the previous step.
You have your budget and a plan of attack.
Now you have to find ways to implement your budget and financial plan into your life in a way that will make them stick and keep you on the path towards taking control of your financial life.
Stay dedicated to the budget as best as you can. Remember what your goals are and make decisions that will lead you in the direction of accomplishing those goals.
And the single most important factor in your financial quest is an obvious one…
Money Talks!
Money, money, money.
It’s ok to admit that you want more money. Most people feel the same way, and it shouldn’t be looked at as greedy at all.
Everyone obviously will need money to make ends meet.
Money is what will keep you within your budget and it’s what will help you accomplish your short term and long term financial goals.
So really the question then becomes, how do you make sure that you have enough money to make your master plan work??
First off, having a good work ethic and putting yourself in a position to succeed in a job is the best thing you can do. Hard work and dedication can lead to promotions and more cash in your pocket.
A second job can be a great option. Maintaining a budget won’t always be easy, especially when you’re just starting out. So a second job can help you early on or throughout your entire journey towards financial success.
Coupon clipping and downsizing are ways to save money, which ultimately puts more money in your pocket as well.
But sometimes that just isn’t enough.
Circ*mstances are different for everyone, and frankly, it’s much easier to say you’re going to increase your bank account balances than actually doing it.
Thankfully, there are tons and tons of ways for anyone to make and save extra money!
Ways to Make and Save Extra Money
We are all fortunate to live in a time where we can utilize the internet and our phones for money making and money saving resources!
There is an endless supply of tools out there to help you make, save, and grow money!
Don’t fall into the trap of thinking that you can’t make any money outside your normal 9 to 5.
With just a few clicks you can take surveys for easy money online or save $10 on your grocery bill by simply uploading your receipt to an app.
Side gig jobs are also easier than ever to get started with nowadays with the best options available coming from apps and other online platforms.
Side gigs such as being an Uber driver, delivering food with Postmates, or teaching online English courses to foreign children are just a few of the great opportunities out there.
Heck, you can even rent out a spare room in your house or rent out your car when you’re not using it!
It’s no lie that the opportunities are literally ENDLESS!
Take Control of Your Financial Life!
The tools are out there for you.
It’s up to you to take advantage of them.
We all know everyone’s lives are different and it isn’t always as easy and simple as making a realistic budget and executing it to perfection.
All you can do is to control what you can control.
Take responsibility of your financial situation.
Set short term and long term financial goals.
Develop a budget that will work for you.
And get out there and make some money magic happen!
As long as you provide the ambition, dedication, and perseverance you’ll be heading in the right direction towards taking control of your financial life!
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