Understanding and dealing with your finances can produce stress and anxiety. This can be compounded by the debt situation in America (Credit card debt for the average American is nearly $10,000 according to the Federal Reserve here), the lack of personal finance education, the taboo around ‘money talk’ and subsequent lack of conversations around money.
Americans want to be in a better position with their finances as “Saving More and Spending Less” was #4 on Inc’s list of Top New Years Resolutions in 2019. The question I find so many people asking is, “How do I improve with my finances and not disrupt my life too much?”
Here are 3 simple ways that can help you take control of your finances (and not disrupt your life too much):
1) Prioritize and Simplify Your Financial Life:
Marie Kondo, author of the best selling book, The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing, asks a question to the reader who is in pursuit of tidying up whether an item sparks joy in his/her life. This is an important question as the reader has to make that determination themselves of whether something brings them joy.
The question, “Will this purchase or does this item spark joy in my life?” can be an important tool to help simplify your financial life. This is how you can do it:
- Ask yourself this question for an item before you purchase it. This will inevitably lead to less purchases.
- Ask yourself this question for existing items around the house. This will lead to opportunities to declutter your home and potentially sell unused items.
2) Create a extremely simple budget:
Putting together a budget can seem painful. It can appear this way because our minds wander to a complex, difficult budget that will take hours for us to update each week. Starting with this type of budget will set you on a track of failure.
Instead, you should start so simple that you are literally only tracking and documenting how much you make and how much you spend in one month. This should take 15 minutes per month. Too often, we try to jump into hyper-complex budgeting apps/methods/tools for our New Year’s Resolution that we are burnt out by the last week in January.
3) Track All Of Your Debt (If You Have Debt):
First, it’s important to understand all of your debt if you have debt. I use free tools such as Credit Karma and Credit Sesame to both monitor my credit score and see my complete outstanding debt situation.
Second, once you understand how much debt you owe, it can be helpful to practice mindfulness to know whether this debt is producing any stress or anxiety in your life. If so, I would recommend to put together and execute a get-out-of debt plan. I find that the free Vertex42 debt reduction spreadsheet can be a helpful starting point.
Self Improvement in personal finances can be hard. It takes discipline and an honest assessment of your saving and spending. Here are a couple final pointers:
- Be gracious to yourself. Two steps forward and one step back is still one step forward, so keep that in mind when you overspend one month or you have to put money on a credit card. If you are not gracious with yourself, this will never work.
- Don’t give up, it’s worth it. When you completely control your finances, the peace of mind is real and now you can start having your money work for you.
Ben Tejes is the Co-Founder and CEO of Ascend Finance, a platform to help people achieve self improvement in the area of personal finance. He is a writer for the Ascend Blog where he writes on topics such as debt settlement, bankruptcy and debt consolidation to help people get out of debt and experience financial freedom.
How to Get Sh*t Done will teach you how to zero in on the three areas of your life where you want to excel, and then it will show you how to off-load, outsource, or just stop giving a damn about the rest.