Ruth Writes is a 30-something Liverpool based blog covering mid-size fashion, pescatarian food and beauty.
Finances can seem tricky, and when you are working to overcome bad habits or learn new money skills, it can seem even more overwhelming. Most people wish they were better with their finances, and the good news is that there are small, easy steps you can take to get things back on track.
When you first start to assess your finances, you need to make a monthly budget. You should start by calculating your monthly income. The number you use should be the net income since you will be operating with the amount after taxes and other deductions are made instead of the gross total.
You will also need to make a list of all your expenses each month. Start with your big bills like rent, mortgage, car payments, utilities, insurances, and any debt payments. You also need to add in gas money, groceries, phone bill, internet, and other expenses you may have. Don’t forget that you will also need to calculate how much you spend on entertainment, clothing, and extra activities. Things like birthday presents, holidays, and monthly subscriptions are easy to forget, but be sure that you have considered all your expenses. Sometimes it is helpful to go back through your bank statements for the past couple months to get a broad idea of where your money is going and make sure it is all taken into account.
Once you have the budget drawn up, you will be able to see where your money is going and when it is leaving your account. Knowing this will help you to start making adjustments and keep a better track of your spending. It is important to make goals and then follow up each month to see if you reached your goal or not. Having a system in place is important to stay on top of it and keep it organized. You can buy special planners, just use a regular notebook, keep a file on your computer, or use a software like templafy.com to help create the perfect tracking document.
Another important part of getting your finances back on track is to manage your debt. Debt payments will influence your monthly budget in a major way, and once you have debt, it can be hard to get rid of quickly. Since the debt you have is accumulating interest, sometimes the payments you are making are not even against the original amount. Even if you are paying against the principle, it may only be a small portion. You should always be paying more than the minimum amount if you can, and paying it off as quickly as possible is the best route if you are trying to get the most out of your money.
When assessing your debt, it is important to write down all the numbers beside each other so you can really see where you are in terms of debt. First of all, you should stop putting things on a credit card unless you pay it off the same month before it accrues any interest. Next, you need a plan to get rid of the debt you already have from various sources. You may have credit card debt, student loans, personal loans, car loans, or any other kind of loan. Be sure you know what debt you have and how much there is of each kind.
Since you already have a monthly budget sorted out, you should have a good idea of how much extra you have each month to put towards any debt. Start by paying off the smallest amount first, and then keep working up to the bigger ones. Each debt that is paid off will give you even more money to put towards the next one. The key here is patience!