7 Small Ways To Start Taking Control Of Your Finances Today
1. Know your credit score
The simplest way to understand your money, debt, and financial future is by knowing your credit score. This is a simple roadmap to your personal finances that outlines debt, available balances, and allows you to easily figure out where you can improve. Knowledge is power y’all.
A healthy credit score is the first step to saving yourself money in the future. The better the score, the better rates on loans, and mortgages you’ll receive. While it might feel like that doesn’t apply to you now, prepping today makes for a better tomorrow.
You’re entitled to a free credit score annually which can be found at annualcreditreport.com. Having a copy of your credit report is a great first step to understanding all of the other numbers below.
2. Pay off your credit card balances monthly
Credit cards don’t need to be as evil as they are cut out to be. With high-interest rates, it’s easy to get out of control quickly, leaving us feeling overwhelmed and hopeless by the amount we have to pay off. By proactively paying off what you spend prior to receiving the bill, you can avoid interest, earn points, and improve your credit score.
3. Know your money values
What are the things that matter to you when it comes to your money? How you want to spend it, what it means to you, and the perception of how it comes and goes matter. Outlining how you want to spend it in your life is important in knowing where to budget and plan.
Does owning a nice car matter to you? Do you want to be able to pick up the tab at friend dinners? Want a huge wardrobe filled with expensive clothes? That’s ok. Just know what matters so you can properly budget for it without feeling guilty and sacrificing everything else in your life for it.
4. Know how much debt you have
Debt can feel overwhelming, but understanding it is the first step to managing it.
Debt comes in many forms: student loans, personal loans, car loans, credit cards, and many more. By understanding the amount of debt to your name and the interest rates associated with each one, you can properly allocate your budget to paying it off.
Prop tip: Refer to your credit report in #1 to find the amount of debt you have.
5. Have a f*ck you fund
A f*ck you fund is something we don’t play around with. This is the first step to saving money. We’re talking before retirement funds (unless you have an employer match) and other long term savings funds.
As a preface, a f*ck you fund is intended to be accessed in the short term in case of emergency. It’s a savings fund that allows you to quickly access cash and gives you the freedom of being able to leave tough situations (ie, that job you hate) or quickly pay for sudden expenses (that ‘spensy car repair) without being devastating.
The amount that goes in here is up to you and your comfort levels, but accounting for a minimum of 3 months of expenses is a great place to start.
Pro Tip: Place this money in a high-yield savings account so it earns interest (bc it won’t if it’s just in your checking account).
6. Start saving for your retirement
Got you f*ck you fund and your debt under control? The most powerful financial tool of all is compound interest, aka allowing your money to grow more money. The key to having a successful retirement savings experience is making sure your financial house is in order. This means you should have a handle on debt and your short term savings fund (aka the f*ck you fund).
Ready to get started on this today? You can open one in partnership with Beacon Pointe Wealth Advisors today for free.
7. Recognize your past relationships with money
Understanding your history allows you to make way for the future. This is a great journaling prompt to allow you to understand your spending, savings, and money ideology. Many of the beliefs we’ve acquired have come in forms that we didn’t realize it even happening. We reflect our parent’s money habits in our own. If you had a great example, that’s awesome, you still have work to do. If you had a bad example where debt, defaulting, and mismanagement was the norm, you have work to do.
Was there never enough? Was it fleeting? Was it abundant? Do yourself a favor and do the work to understand where these habits come from. Start a personal budget
Budgeting your money doesn’t need to feel restrictive and confining. It’s simply a roadmap of how you spend your money and how much you can save. By understanding how much you’re spending, you’ll have the opportunity to understand how much you can save or have fun with.
A good place to start when budgeting is the 50/20/30 rule. This means that 50% of your income after tax should be allocated towards live expenses such as rent, groceries, gas, etc. 20% should be allocated to your savings accounts and fund, and 30% should be spent on things you want aka eating out, a new skincare product, or whatever it is your perfect little heart desires.
You can start budgeting by downloading our Troupe template here.