How many times have you had the thought ‘I’m just no good with money’ and used that to justify why your finances are in shambles?
Or perhaps you’ve made moves to get your finances under control, only to find yourself overwhelmed and feeling like it’s all too much.
But there’s a secret you need to know about managing your money…
It’s not as complicated as you’re making it.
Getting on top of your financial situation and getting your personal finances under control is a whole lot easier than you think.
Yes, it’s probably going to be uncomfortable, especially if you’ve been avoiding it for quite some time, but with a little effort, you can push through the uncomfortable phase, get on top of your finances, and actually start achieving your financial goals.
Why You Should Care About Getting Your Finances Under Control
There’s a point when you realise that your finances are actually 100% your responsibility, and if they are in disarray, no one is riding in on a horse wearing shiny armour to save the day.
As much as many people would love to solve their money problems with ‘winning lotto’ or ‘marrying rich’, the reality is, you have the power to solve your money problems, and it starts with simply understanding your financial situation.
So, if you’ve been avoiding your financial situation for some time now, stop! Get over it. Your finances aren’t going to magically get better by ignoring them.
So dust your hands off, grab your favourite pen, pour yourself a coffee, and settle in. We are going to get this done!
Honestly, all it takes is a few steps and you’re there. Here’s what you need to do:
1 – Check Your Income
The first step in getting your financial situation under control is to take stock of your income and see how much money is coming in each month.
You might get paid in different cycles, but to keep things simple, just work with your monthly figures.
Grab a notepad and write out every bit of income you received over the last month.
Don’t just look at your income from your job, but also any income from investments, side hustles, and even things like your child support if you’re receiving that.
The goal is to not leave anything out. Get as complete of a picture as you can of the sum total of the money that’s coming into your household each month.
2 – Check Your Expenses
Once you’ve got your income down, now it’s time to look at your expenses.
Grab another sheet of paper and write out everything that you spent money on over the last month.
You can break it down into categories if that helps you – groceries, utilities, entertainment, etc. Get specific with what you’re spending money on so you can really get a clear snapshot of where you’re spending your money.
Be sure to include things that you pay annually, and divide the annual figure by 12 to get your monthly cost.
Other things that are easily overlooked for expenses are things like house repairs, car servicing and/or new tyres for a car, school excursions for kids etc.
Even if you don’t have an exact figure for these things, pop a number in and include them, it will all help in the long run.
The point here is just to take stock of how much money you’re bringing in and how much money you’re spending.
This is where you’ll get a true sense of whether or not your personal finances are under control and whether or not you need to make some changes.
3 – Check Your Debts
Now that you know how much money is coming in and going out, it’s time to take stock of your debts.
This includes not just what you owe on credit cards, but also personal loans, car loans, student loan repayments etc.
Get a clear picture of exactly what you owe so that you can make responsible financial decisions moving forward.
While you’re at it, make note of the maturity date of your debt, that is the expected date for your debt to be paid out if you make the minimum repayments.
It always amazes me when people don’t actually know when their loan will be paid off – knowing details like this helps you have a deeper understanding of your finances and helps you feel like you’re more in control.
If you want to get really into it, some financial institutions will show you how much interest you’re expected to pay over the life of your loan. This can be either scary, or super motivational for getting your debt under control.
This is my favourite credit card calculator tool that helps you to actually see how long it will take you to pay off your credit card with a minimum payment versus a higher payment – warning… it can be very confronting.
4 – Set Financial Goals
Once you’ve got a clear picture of your income, expenses and debts it’s time to set some financial goals.
Go all in here and get specific – where do you want to be in one year, two years, five years? The more detailed the better!
Write out what your ideal outcome would look like… Get as detailed as you possibly can about what it is you’re working towards.
Do you want to be debt free? Get specific with how much money you’ll need to pay off your debts by when and how much of that total will go into savings, etc.
What about retirement? Get some date ranges down so you know exactly what kind of timeframe we’re talking about here – are you planning to retire at 50? 60? Or is it your dream to retire at 40 and travel? Get specific!
Having a clear vision for what your future financial life looks like is the first step in making it happen. The more detailed you can be, the better your chances will be of achieving that goal.
Remember, no goal is too big or too small. These are your goals. Just for you.
5 – Make A 5 Minute Finance Plan
Now that you’ve taken stock of your financial situation, set some clear goals and have an idea of what it is you want to achieve financially, it’s time to make a plan.
This isn’t some super detailed plan that will take three months to put together, this is just the tiniest of plans made in the next five minutes!
Here’s what I want you to do…
Get out a piece of paper and your favourite pen, or open up a new document on your computer.
Write down one goal that is at the top of your list of things to achieve. Get super specific, even get down to the dollar amount if you can.
Next, write down the four simplest steps to achieving that goal.
For example… I want to pay off my credit card by 1st August and here are the four steps I need to take in order for me to be able to do that.
Step one – Freeze my credit card so I can’t make any more purchases.
Step two – Reduce my monthly expenses by $200 so I can contribute this towards my credit card.
Step three – Declutter my home and find $1000 worth of things to sell – put all of this money off my credit card.
Step four – Request an extra shift at work/overtime and put this towards my credit card.
See how much more powerful that goal is by putting a few action steps beside it?
This doesn’t have to be a goal around debt though!
Perhaps you want to go on a family holiday, or have money aside for Christmas gifts, or it might even be a financial goal of yours to be able to reduce your expenses enough so that you can reduce your hours at work.
Whatever your goal is, write it down, then write down the action steps you can take to make it happen.
Where To From Here
Now you have a good understanding of your financial situation and you are in control of your money, it’s up to you to keep it this way.
Really, keeping on top of things is as simple as repeating this process once a quarter (every 3 months) to make sure you’re on track and in check.
I do recommend you keep track of your income and expenses all the time anyway (just do this with your budget, it only takes 5 minutes), as keeping track helps you stay on top of anything that comes up and keeps you in control.
Other than that, keep checking in with your financial goals and make sure you’re working towards them.
Once you’ve achieved a goal, celebrate, and move on to the next one! You’ll be smashing through your goals in no time!
Just like that, in 5 simple steps you have a far better understanding of your finances and you have an action plan to help you achieve your financial goals.
While it may have been uncomfortable and you may have even avoided it and procrastinated on it before actually doing it, I assure you, you will always feel better when you understand your money and have your finances under control.