3 Techniques To Improve Your Finances
We always want to start the new year on the right foot, aren’t we? I’m sure you have your New Year’s resolutions carefully crafted to fulfill them this year. Personally, I can relate to this quite easily. Also, I do my own evaluation of the year that just passed. I love making plans for the incoming year and continually tick off items from my bucket list.
There is no denying that 2020 has caught us all off guard in all aspects. Some even more severely than others. Many businesses had to shut down, and as a work-from-home mom, I’ve had my share of clients pausing services. Now, my kids are enrolled in distance learning. I have been spending all my time with them while doing my work as well.
After writing about staying motivated and being consistent during tough times, I wanted to share with you my triumphs and struggles in managing my own finances. I have been reading about this topic for a while. Recently, I came across this quote that I really resonated with.
So how do I really manage my finances? Admittedly, when I was a lot younger, I have had many bad decisions. I still make some of them. However, all of those decisions hone me to become a better version of myself. I would like to share some tips on having a solid plan for managing your finances.
First, you have to really sit down and be totally honest with yourself. Start writing down your own thoughts and feelings regarding your financial situation. Then list down all your credit cards and their corresponding balances. Put it side by side with your bank account. Now, list down all your clients or source of income and make an honest evaluation of your financial situation. Only when you do this step truthfully you’ll fully understand and religiously follow the plan that you’ll create in the next step. Taking this step, I realized I was spending way too much more than what I was earning. After notice that I made the decision to take control of my finances; otherwise, it would eat me alive.
Set S.M.A.R.T. Goals
From your own honest evaluation, create your personal priorities and financial goals. What is it you really want to do first? Do you wish to pay off one credit debt at a time? If yes, which one? List them down according to priority and set your financial goals. If you have 4 different credit cards, you could maybe pay off 2 of them in the first 6 months and another 2 for the rest of the year. Depending on your capacity, ensure that the goals you set for yourself are Specific, Measurable, Attainable, Relevant, and Time-bound. Make short-term goals that feed into your long term goals. Do not fall into the trap of making enormous goals that are impossible to achieve, given your current financial situation.
As for me, I called my 2 banks and arranged a payment agreement. Fortunately, I converted my remaining balance into monthly installment payments for 12 months with very minimal add on interest. Instead of paying just the minimum amount due, I opted to pay for the monthly amortizations religiously. In that case, I was able to improve my credit standing while slowly paying off my debts. It was a struggle, but I was determined to make sacrifices for a year and have my life back on track rather than have my debts “eating me alive.” Your self-discipline will be put to the test, and your character too. Strive to strictly stick to your plan focusing on your end goals. Besides providing for the basic necessities of life, I would love to have the financial capability to comfortably travel with my kids. Whether domestically or internationally, that is one of my short term and long term goals as well.
Establish an Emergency Fund and a Retirement Fund
No matter how small your income is, it is necessary to set aside an amount for emergencies and retirement. Financial analysts or financial coaches would advise you to save up 10% of your earnings. In my experience, this was the most challenging part, aside from admitting to myself that I was in a bad financial situation. However, as I have mentioned, I was determined to rise above these difficulties. I want to become financially independent, so I have to do what I have to do. I’m not where I want to be financially yet, but I’m making a lot of progress. I haven’t added more debs. On the contrary, I’m paying them off. Plus, I have increased my savings for my E.F. and R.F. It is a mighty test on discipline, indeed.
Make that Decision and Stick By it.
These 3 tips I have shared with you are the same 3 steps I have done to pull myself up from the black hole. I had to muster up determination and self-discipline because I have two kids that depend on me. I have to ensure that I’m in a position to take care of them emotionally and financially. It’s a difficult and challenging ride, but as you tick off items in your short term and long term goals, there is a different kind of high. It boosts your confidence. It’s so empowering that you would also want to help others who are in a similar situation. Strive to be the best version of yourself for yourself. If you become a superhero to others in the process, that is just a big bonus. Make the decision to manage your finances, and a note of Natasha Munson’s quote, stick it to the wall, and read it every day.
