Struggling with financial issues can be very frustrating, and can also make you feel like you just can’t get a break. But there are ways to improve your financial situation even if you’re not making a lot of money, or you’re dealing with debt from credit cards, a medical issue, or other factors.
Here are a few of the most important things to consider when you set up a budget for the first time, as well as how to make adjustments as you work on improving your money concerns.
Tips To Improve Your Future Financial Health
1. Be Honest About Your Finances
The first and most important thing you can do to get started on a good budget is to be completely honest about your finances. Even if it’s not a pretty picture you need to look at all of it, so you can see where you’re actually starting from.
Getting into a better situation with money will be easier when you have the right starting point, and when you see the problem areas clearly. Then you can make a plan to take you from A to B and provide you with more financial freedom for the future.
You’ll want to look at the amounts you owe on everything, including vehicles, student loans, credit cards, medical bills, and any other debt. Also write down (or put into a computer program) your monthly expenses such as rent or a mortgage, your water and other utility bills, and how much you pay for things like groceries or car insurance.
If you’re paying a lot of money for things you could eliminate or cut back on, those will be the first areas where you’ll want to start making adjustments.
2. Take a Look at Places to Reduce Spending
Depending on how much you make, you may or may not have disposable income to work with. If you can cut the cable in favor of a streaming service, or switch to a cell phone plan that’s less expensive, those are some things worth doing.
You might also want to reduce the amount of money spent on takeout food or even groceries, depending on how much you’re spending in those areas. In some cases, there might not be much room to cut back, but creating a budget will help you see that.
Also keep in mind that there may be programs you qualify for and assistance you can get if you’re in the very low-income category, or if you have disabilities or certain types of medical issues.
There are programs to help with food, medical care, utilities, rent, and other areas, along with grants for big things like putting a down payment on a house or fixing up the one you already own. Along with reducing spending, look into ways you may be able to get grants and other forms of help to improve your financial picture.
3. Be Sure to Leave Some Room for Enjoyment (and Savings)
In addition to any debt payments or monthly bills you include in your budget you also want to save some money for a rainy day. Having an emergency fund (even if it’s just a few hundred dollars) can help protect your finances when you have a car repair or other unexpected issue.
Add a line in your budget for savings, and put a little bit back each time you get paid. Whether it’s five dollars, fifty dollars, or more, it’s still going to add up over time and give you some security and peace of mind.
Another line you should have in your budget is enjoyment. You might not be able to take fancy vacations, but you can probably plan for a night out here and there. Consider the kinds of things you enjoy doing and then set some goals to do those things by saving up for them.
You don’t want to put your takeout food or the movie you see on your credit card, or you’ll end up further in debt. Instead, set money aside every payday, so you can use it to have a good meal or experience something new. Getting out of debt and into a better financial situation matters, but it’s hard to stay focused if life feels like nothing but sacrifice.
4. Look Over Your Budget Frequently
Once you set a budget it’s not something you can just forget about. You want to reexamine it frequently, especially in the beginning. If something about the budget isn’t working, it’s important to catch the problem quickly and get it corrected.
For example, you might see that your groceries are costing more than you predicted, or the utilities are actually less expensive than what you budgeted for. By keeping an eye on what you’re actually spending vs. what you expected to spend, you can more easily see concerns you’ll want to fix.
As you get more comfortable with your budget and fine-tune it over time, you won’t need to check on it as often. But even then you’ll want to look it over at least every few months, because things like minimum payments on credit cards will change as you pay down debt, and you may want to add extra money to one payment if you pay something else off, so you can keep reducing debt faster.
Also make sure to take a look at your budget if you have any major life changes, because big events will affect how much you’re spending (and may also affect how much is coming in). Everything from changing jobs to having a baby will affect your budget, so you want to be sure you’re keeping it up-to-date.
5. Make Adjustments to Anything That’s Not Working Well
Sometimes, even the best planning just doesn’t work as well as expected in the real world. Your budget might look great on paper, but once it’s put into practice you could find that it’s not fitting your lifestyle or helping you meet your goals. Naturally, that’s something you want to address quickly, to stay on track with your plans.
Don’t be afraid to make adjustments to your budget in areas that just don’t work for you, as long as you’re covering bills and saving some money for emergencies. Staying focused on the goals that are important to you and making sure you’re adjusting your budget as needed both go a very long way toward keeping you moving forward.
6. Understand That Seeing Big Changes Will Take Time
Financial improvements can take a lot of time and effort, but having more security and monetary freedom is worth it. Once you’ve set up a budget that works for your needs and goals, stick with it and keep doing what you know you need to do. It’s not necessarily glamorous, and it’s not always fun.
However, you won’t see big changes overnight. You don’t want to give up on a better financial situation just because it’s taking a while. That time is going to pass whether you work on your finances or not, so it’s better to move toward the goals you want to reach. Then you can look back and be proud of how far you’ve come, along with feeling more financially secure and prepared for anything the future holds.