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5 Tips for Taking Control of Your Finances

Woman taking control of her finances

How to Manage Your Money

If you feel like your finances are spiraling out of control, there’s no better time than now to take charge. After all, how can you make progress toward your goals if you don’t have control of your financial situation? The following tips can help you regain control of your financial life.

Tip #1 – Be honest about your current situation.

The first step in taking control of your finances is gaining an understanding of your current financial situation. Take a hard look at your savings, spending, investments and debt. Be honest with yourself about where you stand today versus your goals. Start by doing the following.

  • Track your spending for 30 days to gain an understanding of where your money goes.
  • Make a list of all debts, including their outstanding balances and interest rates.
  • Make a list of all your assets, including emergency savings, investment accounts, checking and savings accounts, retirement accounts, etc.
  • Make a list of your long- and short-term goals to determine whether you’re making progress toward achieving them, and identify areas for improvement.

Tip #2 – Stick to a budget.

When it comes to taking charge of your financial life, budgeting is one of your most powerful tools. Now that you have an idea of what you spend your money on, you can set some monthly spending goals. For example, maybe you decide it’s time to cut back on streaming services or eating out.

It may be helpful to view your budget in terms of your priorities and values. What’s most important to you? Spending time with family? Pursuing a hobby? Saving for a down payment on a home? Focusing on achieving what’s most important to you can make it easier to cut back in other areas. A budget doesn’t necessarily need to be restrictive, but it can help you realign your spending with those priorities and values.

Once you’ve established a monthly budget, keep a running record of your monthly income and expenses to assess how well you’re sticking to your goals.

Tip #3 – Pay off debt.

It’s difficult to take control of your finances when you owe money to creditors, especially if you carry any high-interest loans. Take back the reins by paying down your debt as soon as possible.

Two effective strategies for paying off debt include:

  • The snowball method – This involves paying off your smallest debt balance as quickly as possible then moving on to the next-smallest debt. The benefit of this approach is it can help you gain a sense of accomplishment as you knock out one loan after another. It can also help your cash flow, as you can knock out the monthly minimum payment.
  • The avalanche method – Using this method, you begin paying on whatever loan has the highest interest rate. Once that’s paid off, you move on to the loan with the next-highest interest rate until all loans are paid off. This approach allows you to pick up speed as your go because each payment saves you more money than the one before.

Tip #4 – Save for emergencies.

To protect yourself and your loved ones from unexpected financial hardships, it’s important to have at least three to six months of living expenses saved in a short-term, liquid emergency fund. This fund can help protect your savings and prevent you from going further into debt should an emergency occur. If you don’t already have an emergency savings fund, make a plan to set aside a certain amount each month to begin building one up. To hold yourself accountable, be sure to add your target savings goal as a line item in your monthly budget.

Tip #5 – Plan for the future.

One of the best ways to take control of your finances is by establishing a financial plan. A solid plan can serve as a blueprint to help guide all aspects of your financial life. It can help you gain an understanding of your current financial situation in relation to the goals you’re trying to achieve. This knowledge can be used to inform all of your financial decision-making, from savings and investments to budgeting, retirement planning, college planning for a child or grandchild, estate planning, insurance planning, etc.

In other words, having a financial plan in place puts you more in control of your financial destiny.

Creative Planning’s experienced professionals work as a team to help you take control of your finances and your future. Schedule a call to learn more.

This commentary is provided for general information purposes only, should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.


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