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Finances need an overhaul? Here's how to get them into shape
Life happens, and sometimes, the budget can get pretty difficult to control. It happens to the best of us – overspending, debts piling up, and the escalating cost of living fuelled by the global pandemic and the war in Ukraine.
If your finances need an overhaul right now, you’ve come to the right place, because we’ve got some money management tips that will help to get them back in shape.
Evaluate the issues
The first step towards clear financial planning is to know exactly what mistakes you’ve made, or what issues lead to your current financial situation. Did you overspend? Was there an emergency expense that you were not financially prepared for?
Take these mistakes as a learning experience, and don’t let them discourage you. If you’ve overspent, have a think about how necessary those costs really were. If there was an emergency expense, start planning to incorporate some savings into your budget so you’ll have money put away just in case something similar happens again.
Revise your budget
Now that you know what went wrong, it’s time to revise your budget. In many cases, it may mean giving up on some of the bad habits that caused you to overspend, like eating out or excessive credit card usage. Or maybe you've been caught up in too many buy now pay later schemes. Even if your overspending was due to unplanned and unavoidable expenses, unfortunately there will still need to be some belt-tightening to get things back under control.
But don’t forget that your budget will probably change all the time. For instance, when you need to allocate some funds for gifts, or if you want to save for a getaway somewhere nice. Squirreling some money away each pay day for those little extras is a good habit to get into - and the more you get used to revising your budget to accommodate them, the better your money management skills will become.
Revisit your household budget
Your household budget doesn’t just mean groceries and utility bills. It also includes credit card payments, your mortgage or rent costs, school expenses, petrol and anything else that you need to spend money on.
When done right, your household budget can be your starting point to getting your finances back in shape. It’s a good idea to revisit it and identify your priorities – every month. Once you have your list of spend priorities (your non-negotiables), you can then look at what’s left over and how you want to allocate it. Take a look also at how you might be able to reduce some of your expenses, such as buying in bulk, or switching to lower cost brands. When it comes to saving money, small changes can definitely add up quickly!
Partner with someone for accountability
A great way to keep your financial planning on track is to find a partner who will hold you accountable if you start to stray. Whether it’s your life partner or a close friend, if someone questions your budget, it can help you to identify where things are going wrong with your money management.
Manage your debts
It may not be as easy as it sounds, but if your debts are the reason your finances are in bad shape, it’s time to start managing those debts right now. If they are credit card debts, reduce your usage or stop using them completely until your finances are back on track.
Find ways to pay off your debts as soon as possible, like consolidating through a personal loan - it's quick and convenient and you can clear your debts faster with a simplified, single repayment strategy. The sooner you get out of debt, the easier your financial management can be.
Keep trying
Of course, getting your finances back on track is not going to be all peaches and cream. There will be heaps of little blips along the way as you overhaul your finances and try to get back in shape. But the key is to always keep trying.
Don’t stop if you fail in the first month. It may mean there’s something else going on, so revisit your goals and budget. Keep doing it until you find the right formula.
Get back in shape now!
There's no perfect time to overhaul your finances and get back in shape, but the sooner you start, the better. It will take time, patience, and a lot of effort, but getting started is the best way to see where you’re heading. If you need assistance to combine your debts so you only have one regular repayment amount to worry about, we're here to help. Our services are best suited to people that have at least $5,000 in debts to more than one creditor - AND they are having trouble paying these debts. If this sounds like you, enquire about our Pay-In-One debt assistance program today - what have you got to lose but your debts!