Gain some control over your finances
Managing money and debt can be really stressful. It’s easy to fall behind and feel like your bills are taking over. But with a few simple steps you can start to take control of your finances so that you feel more empowered and able to make decisions that will move you forward.
You need a budget
The very first step in managing your money is creating and implementing a budget.
Tackling your debt
Feeling saddled with debt? Getting rid of debt can be a challenge, but you have options.
Rebuilding your credit
Your credit history and score impact your financial future, from buying a car to signing a lease on your first apartment.
First things first: get a budget in place.
Budgeting means knowing how much money you have and living within your means. Without a budget, you may be in the dark about how much money is coming in and where it’s all going.
When you sit down and create a monthly budget, you start to have visibility into what money you have available, what your priorities are, and what your plans are for spending and saving. Instead of feeling guilty about your spending, or running short of funds to pay a bill, you may find that you have set aside some money for savings, are paying down that credit bill, and you’re not as stressed as you used to be. Sounds great, right?
Budgeting does take discipline, though. You have to take the time to build your budget, make a plan, and then follow through with it. The effort is well worth it, though, and we highly recommend it as a first important step to managing your debt and finances. Here is how to get started:
- Determine your monthly income. List all sources of money coming into your accounts, using the net amounts (the amount you receive after taxes and other deductions).
- Write down all of your major fixed expenses and subtract them from your net income. Fixed expenses may include mortgage or rent, auto payment, insurance, utilities.
- Set realistic goals for your remaining money. You’ll need to set aside money for important things like groceries, savings and credit card payments.
- Track your expenses. Keep track of your purchases in a notebook or using an app, and compare it with the budget you’ve created.
Use credit wisely and manage your debt.
Credit cards can be very helpful, and responsible use can reflect positively on your credit score. But managing credit wisely takes planning and willpower. Even though it’s tempting, it’s very important that you not spend more on a monthly basis than you’re bringing in. Here are some tips for how to use credit wisely:
- Educate yourself on the responsibilities of using a credit card. Make sure you know how it works—fees, interest rate, minimum payments and due dates.
- Ask yourself—do I really need to borrow money or use credit? Would cash or a debit card work just as well for this purchase?
- Choose your credit cards wisely. They’re not all the same. Compare cards and choose one with a low long-term APR (annual percentage rate), low or no fees, and a small manageable credit limit.
- Limit the number of cards you have. Too many cards may result in an overuse of credit, which increases your likelihood of being in debt.
- Keep track of your monthly credit card spending, when and why you made purchases with your card, and how it fits into your monthly budget.
- Don’t spend more than you can afford to pay each month. If you’re using your credit cards for important budget items like groceries or utilities, this is a sign that your budget needs reviewing.