Life is expensive, so a lot of us struggle with money. It is no fun juggling your car lease, rent, and student loan repayments. By the time we are in our early twenties an awful lot of us already have significant debts.
Looking up silver prices to see if those coins gifted to you for your 21st birthday are valuable and selling them may get you out of financial trouble once. However, you can’t always do this to cover your debts.
Here's the deal.
The sooner you gain proper control of your money, the easier your life will be over the coming years. Instead of paying out a lot of money in fees and interest, you will be able to spend some of what you earn on having fun and buying what you want.
Below is our step-by-step guide to quickly gaining control of your finances.
Establish what your current financial position is
One weekend, gather together all of your bills, loan agreements, credit card statements, and savings books and stack them on your table. Or, if you hold all of this information electronically, create a list for all of it. Regardless of which method you're using, next, you need to download a budgeting app and feed everything into it.
Estimate how much you spend per month on all essentials like rent, utilities, transportation, food, and pets. Any expenses you can’t avoid. If you view things like your gym membership and going out for a drink once a week as essential, include those too.
Basically, you are working out how much net income you have coming in. Things like your salary, dividends, and interest, minus all those necessary expenses. Doing this allows you to determine how much money you have to spend on things you want to do, not just the things you have to do.
What to look for when choosing your budgeting app
Choose an app that can automatically interface with all of your accounts. The more automated things are, the more likely it is that you will stick to using it. The Mint app works for most people.
Each time you use your credit or bank card, input the details of the purchase—the amount spent, time, location—into the app.
When deciding which app to use, check that it is designed to work with your country’s banking system. Also, do a bit of research and make sure you are happy with sharing your banking information with the app and that the app has good reviews. Most people are comfortable sharing the information if they trust the app, but that is a choice you should make for yourself.
What is the benefit of using an app to get control of your money? We all have our phones 24/7, so you will never be without your trusty guide of how and if you should be spending your money.
Set your budget and track what you spend
You have all of the information you need in the app, and it is talking to your bank accounts, credit cards, and savings accounts. Now you need to set your budget. How you do this is up to you. The important thing is to turn notifications on so you are warned before you overspend in any category. That way, if you get asked for a meal out at the end of the month, you know whether you can afford to say yes or not.
Sticking to a budget takes time to get used to. At first, you probably won’t like it, but pretty soon it will become second nature.
Even if it takes time for you to adjust, you will definitely like the way you feel at the end of the month when you are not in the red. It is no fun trying to work out which bills to pay and which ones to rollover. Each time you have to do that, you know that you are getting into deeper trouble financially.
It is a very stressful way to live. So, when you don’t have to anymore, it feels great.
Regularly review your budget
Everything discussed above can all be set up in a few hours, and you should only need a few minutes per day to keep track of everything. Plus, perhaps an hour at the end of the month to sit down and work out if you need to tweak your budget.
Reviewing your budget is an integral part of getting control of your money because it will allow you to make adjustments as your life changes as well as keeping you accountable to yourself.
For some, having an accountability partner (or an accountabili-buddy, if you will) makes a big difference. If you struggle with organization or keeping promises to yourself, this will be an excellent option for you.
Pay off your debt as quickly as possible
If you have debt, it is wise to pay them off quickly. Again, there are apps out there that can help you to do that. The Debt Snowball one is particularly useful, although there are others available which are also well worth checking out. You can find out more about debt management apps by clicking here.
Start saving for your future right now
If you are not very good at saving your money, there are apps available that can encourage you to catch the saving bug.
Acorns is a popular one. If you want it to, you can set up the app so that it saves some of your cash virtually every time you buy something. For example, if the item you are buying costs $4.56, $5 will be debited from your bank account. The extra 44 cents deducted will automatically be added to your savings account.
This method of saving might sound insignificant, but it is the same as putting your change into a jar when you get home. Over time, you will save a lot. More importantly, it is an effortless and surprisingly fast way to save.
Digit is another app well worth investigating. It discreetly monitors your spending patterns, determines how much you can save, and automatically moves it from your current account into your savings one.
Regain control and stay in control
As you can see, gaining control of your finances isn't as difficult or time-consuming as you might think. Additionally, once you are back in control of your money, staying that way will be even easier. So, there is no reason not to get started right away.
Take the time to get in control of your money now—it will save you later on.