Money makes the world go around; unless you haven’t got enough of it – then it feels as though your world is grinding to a scary halt. Most people have a vague understanding that to take control of their finances, they need to budget and practice healthy spending habits. However, putting these general ideas into practice can be challenging. So, let’s break down the steps into five easy actions that will help you gain control of your finances in 2022.
- Work with An Accountant and An Independent Financial Advisor
If you are an individual and not a business owner, you may not have considered that working with an accountant could be beneficial. Aside from preparing your tax return for individuals, an accountant can also help you examine your money management issues. Meanwhile, a financial advisor can help you to choose where to save or invest any money you’re able to set aside each month. Learning healthy spending habits and getting into a position where you can save a little each month is imperative.
- Understand Your Financial Health as It Stands
Getting real about where you stand financially can be incredibly tough, especially if you’re struggling to cover your monthly expenses. Your financial health is good if your expenses are consistently lower than your income. The wider that gap is, the better, and the harsh truth is that if you don’t even know what that gap is, you’re driving blind.
Be honest about your expenses, record them all in a spreadsheet or budgeting app, and compare them to your income. If you have debt that takes up a lot of your budget, and you find yourself using your credit card to get through the month, your financial health needs an urgent checkup. Seeing a debt consolidator might ease the pressure.
- Stick to Budget
Without a budget, you run the risk of seeing your credit limit as a free source of money to cover the cost of living. Of course, you know it’s not free, but since the consequences will fall to a future version of yourself, it’s easy to simply put them out of your mind. The best way to prevent this from happening is to create a budget and then stick within its parameters.
- Stop the Debt Cycle
This might sound obvious, but the temptation to start making purchases on credit will eat into your future and hedge you into a life that may not be ideal for you. Debt takes away your options and your freedom. There’s no space to take a break from work and go traveling or accept a lower-paying but more fulfilling role if you have debt hanging over your head.
So, if you struggle to survive without leaning on credit, you need to address this issue now. Determine how much money you need to earn to quit relying on debt, and make this an urgent financial goal.
- Hold Yourself Accountable for Your Spending
Set aside a certain amount of money you can spend each month on the things that bring you joy, and stick to it. One of the best ways to stay disciplined is to separate your spending money into its own bank account. When that account is empty, you have to wait until you can top it up next month. This encourages self-discipline and enables you to maintain your financial health.
Achieving financial prosperity requires discipline, honesty, and a willingness to accept help from others – all of which are marvelous character traits to develop. So, at the end of this journey, you will have found more than just financial freedom.
