Money is our primary resource in life. We need it to survive and achieve many of the goals that we have for our lives. It’s right up there with water and air – because without it there is no shelter, food, clothing… etc. Over one-third of adults spend more than they make and about 70% live paycheck to paycheck.
Do those statistics get your attention?
Many of us think of our finances based on our desires or what we believe we’re entitled to. We see credit card purchases as something we deserve at the moment and well, we’ll just take care of the bill later. Or we’ll knowingly go out to eat with friends even though we’re a little short on the light bill this week.
This happens when we distance ourselves from the responsibility of stewardship over money, instead of deciding to take control of our finances.
In order to really achieve true financial freedom, you have to get real about your current situation. It’s a process, a mindset shift, and a new way of doing things. You’ll need a strong understanding of how much money you need to survive and a solid plan for anything you earn over that.In order to really achieve true financial freedom, you have to get real about your current situation. It's a process, a mindset shift, and a new way of doing things. Click To Tweet
steps to getting your finances in order
Stop avoiding the ‘B’ word
It’s time to get off the paycheck to paycheck hamster wheel. It’s usually unexpected emergencies that cause us to get off track with our money… and we somehow find ourselves stuck in a cycle of mone-in-money-out. No plan, no progress, no improvement.
In order for a budget to really work for you, you have to understand the psychology behind it.
In order for a budget to really work for you, you have to understand the psychology behind it. We are generally more reactive than we are proactive when it comes to our money. We tend to analyze what we did wrong, in hindsight, instead of controlling how we handle our money when it’s in our possession.
Your money needs guidance.
You need a budget. You should know exactly where your money is going at all times.
- What bills are do (and when)?
- How much income do you earn (and how frequently)?
- What expenses are a necessity and which are optional or are no longer needed?
- How much of your income is allocated to debt and savings?
These are just a few of the components of a strong budget. Don’t get stuck trying to find the perfect budgeting method. You may read a lot about different types of budgets. We even have an amazing post here on setting up a budget – but the important thing is that you find one that works for you and you stick to it.It's usually unexpected emergencies that cause us to get off track with our money... and we somehow find ourselves stuck in a cycle of mone-in-money-out. No plan, no progress, no improvement. In order for a budget to really work… Click To Tweet We are generally more reactive than we are proactive when it comes to our money. We tend to analyze what we did wrong, in hindsight, instead of controlling how we handle our money when it's in our possession. Click To Tweet
Stop financing everything
If the idea is financial freedom, then the first step has to be minimizing your debt. We generally finance things that we can’t afford to pay cash for. But ultimately we can’t pay cash for most things because our monthly expenses are inundating with debt payments.
If you add up all of your debt payments per month, you’ll likely have a number in the hundreds of dollars… even thousands in some cases. Now think about how much money you would have to pay cash for similar items if you were able to save that amount each month. Saving money is the key to financial abundance.
For example: if your monthly expenses currently include $500 in debt (credit card, car note, loan) repayment and instead you saved that amount each month, you would end the year with $6000 saved (plus any interest). It’s time to wake up and intentionally take control of your finances.If the idea is financial freedom, then the first step has to be minimizing your debt. Click To Tweet
Don’t worry, you’re not alone.
It’s easy to get into the mindset that debt is okay. Don’t have the money for that thing you want right now? It’s okay swipe that credit card. Can’t afford to pay cash for the car you really want? It’s okay, finance it and add that extra $400 to your monthly expenses for the next 4-5 years. Only, it’s not okay. Before you can enjoy the benefits of financial freedom, you have to deal with your current debt load.
When your full-time job or your business income isn’t enough for you to get ahead, it’s time to do something different. And believe it or not, a part-time job isn’t always the answer. Get creative and make extra money using your skills and abilities to supplement your finances.
Think about it this way: If you could make $20 an hour picking up freelance writing gigs, doesn’t that sound better than having to leave your home for a part-time job that will only pay you around $10 an hour. Or, if you could earn an extra $500 a month watching your neighbors kids after school for a few hours, how much of a difference would that make to your monthly budget.Get creative and make extra money using your skills and abilities to supplement your finances. Click To Tweet
Every change you make makes a difference.
Deciding to earn extra income will get you closer to paying off debt, creating strong savings, and investing in your future. Don’t discount the affect earning more money can have. For most of us, an extra $500-$1000 a month has the potential to change our entire financial situations.
Keep reading: How to make extra money quickly!
Once you have paid down debt and have strong savings set aside, you’ll likely have additional income to spend. Congratulate yourself, but be smart about it. Don’t think small. Start thinking about how your money can grow for you. Consider options like investing, buying a home (or an investment property), or starting a business.
Tips: If you’re not a budding entrepreneur, consider investing in property. There are multiple benefits from tax deductions to additional income. Not sure if being a landlord is for you? Read our post on the landlord side-hustle. If you are considering starting a business and it involves having a physical location, do your research first. You’ll be adding overhead right back into your budget. And know the ins and outs of retail/commercial leasing of space. Use this triple net lease guide will help you to understand what to look for.