Many of us, at some point, feel as though we’re trapped with our finances. If you feel like your finances are one big mess, it’s difficult to feel hope that you will ever have the money to accomplish what you want.
If you want to move forward, you need to bring order to your financial chaos. While the task can be daunting, the good news is that it’s not impossible. You can order your finances. Here are three steps to take to make it happen:
1. Know Where You Stand
You can’t fix your financial issues if you don’t know what they are. In order to start moving in the right direction, you need to know where you stand. Take a brutally honest look at your finances.
List out your debts. List all of your financial accounts. Figure out where you’re at right now in terms of assets and liabilities. Determine your net worth so that you can get a snapshot of what your finances look like in this moment.
Once you’ve done that, begin tracking your spending. You can’t get your finances in order if you have no idea what’s really going on. If you really want to connect to your financial situation, and become hyper-aware of how you’re spending your money, use the pen-and-paper method. Write down everything you spend, as you spend it, so that you know exactly where your money is going. Do this for one to three months to identify your habits.
Now that you know where you are, you can take action.
2. Focus on One Aspect of Your Finances at a Time
Trying to order your finances and reform all your money habits overnight is an exercise in frustration and futility. Instead, focus on one aspect of your finances.
Figure out which aspect of your finances is most dire. If you are most concerned about debt, that’s the area you need to concentrate on first. If you are concerned about plugging money leaks and trimming the fat in your budget, start there.
Look at this one area of your finances, and make a plan to improve it. If your chosen area is debt reduction, go through all of your debts and figure order them, putting together a debt avalanche plan to tackle them one at a time. Once you have that plan in place, you can move on to your next goal.
This doesn’t mean that you need to have all your debts paid off before you start working on other areas of your finances. What it does mean, however, is that you need to figure out how to approach your debt before you worry about approaching your next issue. Get your debt plan in order, and set your plan in motion, and then tackle your next issue.
If you take this measured approach, ordering one aspect of your finances at a time, you can set more than one plan in action, and eventually have an overall plan that encompasses your entire financial life. But take one step at a time.
3. Get the Support You Need
Even when you take things one step at a time, it can be difficult to figure out where to begin. Even if you do come up with the plans to move forward, it might be hard to stick with your efforts to keep your finances in order.
This is where you need support. If you feel overwhelmed with starting a plan, consider talking to a reputable financial professional. A certified credit counselor can help you put together a debt repayment plan. If you are concerned about a financial roadmap that can take you from here to retirement, a fee-only planner can help. I feel overwhelmed by my taxes, so I hire an accountant to prepare them each year.
You don’t have to hire a professional to get the support you need, though. Sometimes you just need someone who can help you remain accountable. There are a number of communities online where you can join forums and chat with people who understand your situation, and who can provide helpful pointers and keep you motivated.
It’s also possible to find a financial partner (it doesn’t have to be a romantic interest) who can help you remain accountable, and keep you on the right track. The important thing is to find people who can support you in your goals, and who won’t pressure you into abandoning your plans.
Getting your finances in order is rarely easy. However, with the right approach, and a little determination, it is possible.