How to Take Control of Your Money
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Nobody cares more about your money than you, and no one will protect it like you can.
However, personal finance can be complicated, and we’re often left to figure it out on our own. If we don’t know much on the subject, things can get out of control fast – but it doesn’t have to. So whether you’re starting a financial journey or trying to rebuild your financial life, here’s how to take control of your money.
1. Take control of your credit
Some people prefer “not” to use credit, and I completely respect this. But regardless of how we feel about credit, it carries weight in the lending world. Therefore, it’s important to monitor our credit history. And with that being said, if you can’t remember the last time you checked your credit reports, it’s probably been too long.
Of course, it isn’t enough to check your credit – you need to maintain good credit too. This involves paying your bills on time, keeping your credit card balances low, and ensuring the accuracy of information on your reports.
As far as disputing and fixing errors on your credit file, you can do this on your own. However, it can be a consuming, lengthy process. If you don’t want to do it alone, one recommendation is using Lexington Law. This is a credit repair law firm that has relationships with all three major credit bureaus and FICO.
They can provide a credit report consultation with an experienced credit advisor, and the service specifically addresses inaccurate or negative credit items caused by many life events like divorce, student loan debt, medical expenses, identity theft, military services, and national emergencies.
2. Confront money problems
If you’ve lost control of your finances, it might be easier to ignore the problem or shove it to the side
However, ignoring a money problem doesn’t make it go away. This can actually make it worse, and the longer you procrastinate the longer it takes to find a solution.
Even if you take a “head in the sand” approach (choosing not to actively think about it), the problem can sit in the back of your mind. This can lead to financial insecurities and money worries. So be proactive and face your finances head on. Coming to terms with your situation can be scary, but you can’t get ahead until you know what’s holding you back.
3. Educate yourself (learn beyond the basics)
I read a quote that said “financial literacy can be the difference between opportunity and adversity.”
This speaks to the importance of financial literacy. Yet, financial illiteracy remains a big problem, contributing to a lot of money problems.
In 2017, one survey found that 70% of Americans couldn’t answer three basic questions about money. Some might shrug this is off as “no big deal.” But poor financial education can often lead to bad money decisions, bad credit, excessive debt, and it can affect home and employment options.
Therefore, learning about money is key to gaining control of your finances. As you learn about money, don’t stop with the basics. Understanding budgeting, credit, and debt is a good start. But make sure you’re also learning about investing, insurance, savings accounts, etc.
The ability to “fully” grasp these concepts is powerful and can lead to better outcomes.
4. Create a sustainable spending plan
One of the easiest ways to lose control of your money is not knowing where your money goes.
Having a budget or spending plan might seem like a no brainer. But there are people who don’t budget or feel that they’re too broke to budget.
I give quick money tips on Tiktok and I’ve heard some interesting comments related to budgeting. I had someone reply, “budgets are for poor people,” and on the flip side of that I had others say “I’m too broke to budget.”
The truth is, budgets are for EVERYONE. Six-figure broke people do exist.
Understandably, budgeting isn’t always easy. However, if you’re running out of money between paychecks or you’re not saving, lack of a budget could be part of the problem.
Once you know what’s coming in and what’s going out, you might be able to cut back and give yourself some breathing room.
5. Stop living in the moment
Living in the moment is great advice for being more present and worrying less, but it’s not the best advice when it involves your money.
This type of thinking comes with a price tag. You’re likely to make financial decisions based on how you feel at a certain moment, and you’re less likely to consider how a decision will affect your money in the upcoming weeks or months. Therefore, make sure you count the cost.
- How will this action affect your finances long-term?
- Will this decision put you closer or farther away from your goals?
- Will it make it harder to save or pay off debt?
- Will it add to your financial burden?
Asking yourself these questions allows time to think about your next steps.
6. Come up with a system to get organized
Poor organization might not seem like a major issue, but it can lead to financial problems. If you’re overwhelmed with expenses, a few items might fall through the cracks. So another way to take control of your money is to organize your bills. For example:
- Switch to paperless statements and reduce paper bills
- Use a calendar to write down due dates
- Automate your bills
- Schedule a weekly bill paying day
- Create a designated place for mail
But these aren’t the only ways to get organized. You should also check the interest rate on your credit cards, and then see if you can negotiate them. Also, review your insurance rates and shop around for a cheaper price.
8. Plan ahead (as best you can)
Financial shocks and curveballs will happen. It’s not a question of if, but rather when.
Now, worrying and waiting for something bad to happen is obviously no way to live. But we can’t ignore the fact that bad things do happen, so it’s crucial to plan ahead. For this reason, an emergency fund, a retirement plan, and insurance (whether it’s life, health, or renters) are all part of a good financial plan.
When worst-case scenarios happen, a plan can soften the blow and keep your head above water. Likewise, you can also plan by keeping current with routine home and car maintenance. Preparing for the unexpected is another way to maintain control of your money…so that it doesn’t control you.