& be able to pay bills in full & on time but I don’t know where to start.”
In the beginning, it can be extremely tough to see yourself financially stable, free from bad debt, able to pay bills in full & on time monthly & able to help loved ones when they need it when you are living check to check, constantly fumbling the bills & trying to make your checks stretch as far as possible. It can be a very stressful place to be in.
Coming from someone who ‘lost it all’ & ended up homeless, I’m here to say IT’S POSSIBLE to turn your finances around & gain control of them!
But, where do you START when you want to turn your finances around?
Here are 3 effective things I did to get started
Invest time in gaining an understanding of your situation.
This means taking time to understand:
what all your expenses are,
how much they are on average
how often they come,
when they are due
And what you want your outcome to be
You need to do this thoroughly.
Most of the time, budgets will fail because of a lack of preparation and follow-through, not because there isn’t enough income coming in.
Once you have a list of your expenses you are in an excellent position to do a comparison between your income & your expenses.
This is a decisive step forward.
Once you can see your numbers in black & white, things clear up & now you can back away from the emotion & make some mature decisions about your spending habits.
Identify your shortfall
When you are in the process of turning your finances around, the biggest obstacle to your success is a little thing called “habits.”
Let’s say you set up a budget today & in that budget, you committed to stacking 30% of all your income on a monthly basis.
It’s a simple but effective system, assuming of course that your monthly income was enough to cover your expenses even if you stacked 30%.
Now think about your situation, what is stopping you from implementing this “30% saved” system right now today?
It seems like everyone has some sort of budget ‘shortfall' when they first start budgeting & it's usually the thing that keeps you trapped in the pay check to pay check cycle because instead of putting aside, for example, 30% of this checks pay, you choose to use this checks pay to cover out-of-budget expenses.
So now, as a result, there is not enough for tomorrow.
The thing you will need to do is pinpoint what your budget shortfall actually is.
Do you spend money before you get it? (Meaning, you know a check is coming this week so you go ahead & spend money on the thing(s) you couldn’t afford if the check WASN’T coming.) Do you tell yourself, “I’ll start next check” or “I’ll sit down to figure out a budget when I have time” instead of CREATING time? Do you make excuses for yourself to fall off? (It’s honesty hour, don’t be ashamed. This is a safe space.)
Once you have pinpointed your shortfall, now you can get purposeful about overcoming it.
Could you sell stuff, pick up a side hustle like Uber or InstaCart, or work some overtime?
Act like it’s life or death, get creative. Do whatever it takes to gain control of this shortfall quickly.
Start looking forward not backward
As I stated above, most people are trapped in the pay check to pay check cycle because they are using tomorrow’s income to pay yesterday’s expenses.
To fully take control, you will have to turn this around.
You need to start looking & planning for tomorrow, for the future.
This means you must first allocate a set percentage or set amount of money to your future expenses & then commit to it.
Never decrease the goal, simply increase the efforts.
By controlling your finances like this, you are ensuring you will have funds set aside to pay for your future expenses as & when they happen.
It also means that your shortfall has been conquered.
This strategy will require some juggling & real effort for a couple of months & with each overdue bill you pay off, & each dollar you put back for tomorrow, your shortfall begins to diminish.
It can be challenging to know where to start when your finances are so all over the place, but please believe you can do it.
Take a step back & get a genuine understanding of where your money comes from & goes.
Once you are done with this part, & you can visualize the numbers, now comes the ability to set up a realistic budget & make mature and objective decisions about your spending habits.
It will take a few months to put into place but please keep going, it is truly worth it.
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