Stressed about your money, the future of the economy or your job? Don’t worry, many Americans are in the same boat. I talk to people every day who want to know how to handle money in these crazy times. Unfortunately, many are stressed about income, spending, bills, job security, selling their house, retirement or credit cards.
The good news is you don’t have to be burdened. Here are 5 simple things you can do to eliminate that strain and anxiety and bring a little peace of mind into your life.
Track your expenses.
You’ll be surprised. Money is flying out of your account every day, and unless you know where every penny is headed, your stress level will continue at a high level. Whether you use a spreadsheet, an abacus, a pencil and paper, or another source like Ramsey+, just do it.
Keep every receipt, record every expense. Then, take inventory of ’em all. It makes a difference when you see every penny and every cost.
This is critical and absolutely necessary. Nearly 7 out of 10 Americans couldn’t pay a $1,000 emergency bill today. Failure to take this simple first step will derail your best efforts to manage your money every time. Do whatever you have to do to put $1,000 aside. If you earn less than $25,000 a year, then $500 will work for starters.
Where to keep it? Glad you asked. Open a separate account, one that you can access, but separate from other money accounts. We actually recommend using a separate bank from your checking and traditional savings. That way it’s accessible, but not easy to move into your regular account. Remember, your emergency fund is insurance, not an investment. Money markets or savings accounts are the best for this account.
If you do nothing else, take this step. If you have that in place, keep reading.
Pay off debt.
You say, hey, I can’t even keep up with regular bills, much less pay all my other stuff. After you establish your emergency fund, paying off your debt should be your laser focus.
Start the debt snowball. Pick the smallest debt and knock it out, then move on to the next one.
Have a plan.
Do you know where you’re going financially? Better still, do you know how you’re going to get there? Stop throwing it all up against the side of the barn and hoping against hope that it sticks. Put together a systematic plan to pay your bills, get out of debt, plan for retirement and manage your money.
You can live the life of your dreams if you have a plan.
Yes, it’s the ugly six-letter word, and you knew it would be in here somewhere. Again, 70 percent of couples don’t budget consistently. Your budget does give you a road map to success. The biggest problem for most people is sticking to it.
- “Too difficult.” *
- “I tried, but it doesn’t make sense to me.”
- “I don’t know where to start.”
The most significant step is the first step. If it’s overwhelming, choose one of these baby steps and make a move.
Need help with your finances? Chip is a Master Financial Coach and a Dave Ramsey Preferred Coach who helps people live stress-free and debt-free. Email us with your question, or schedule a free 30-minute consultation.