How To Start Turning Around Your Finances in a Week
Developing strong money management skills takes a lot of time and patience, but if you’ve been living paycheck to paycheck for years, your patience may be running out. The good news is that there are many steps you can take to turn things around in as little as a week.
A lot of money mismanagement comes from knowledge gaps, according to Tiffany Grant, owner and financial wellness facilitator at Money Talk With Tiff. She suggests taking a week to read a couple of articles, listen to a podcast or find some other way to educate yourself on how money and the economy work. “Then start implementing some of your key takeaways,” Grant said, adding that you can focus on making small, sustainable changes.
Start Tracking Expenses
Grant said that when she goes through this simple awareness activity with her clients, their spending habits start changing almost immediately. “We are on autopilot most of the time in many areas of our lives — money is no exception,” she said. “Turn the autopilot off and start tracking what you spend your money on.” You might be surprised by what you find.
Give Yourself a Weekly Budget
If you’re new to budgeting, the idea of creating a massive budget might feel daunting. So take it one week at a time. “Decide what bills need to be paid during the week, set aside funds for those, and then give yourself a little spending money to treat yourself,” said Julie Ramhold, consumer analyst with DealNews. “However, pick the amount and be stern with yourself.”
For example, if you choose a weekly budget of $300 and you’ve spent that by Wednesday, that means no more extraneous spending for the rest of the week. “To help you visualize how much money you’re spending, you may want to take out cash and pay for all your unnecessary expenses with it,” Ramhold added.
Set a Specific Financial Goal
When trying to get your finances on track, vague goals such as “spend less” don’t really give you anything in particular to focus on. “And because it’s so broad, it makes it harder to stick to when temptation arises,” Ramhold said. So focus on setting one very specific goal instead, whether that’s setting aside an extra $100 a month or putting an extra $25 toward your credit card balance each week.
Cut a Subscription
It’s common for people to keep paying for subscriptions they don’t actively use or that have increased in monthly cost without realizing it. Brittney Castro, a CFP with Mint, suggests reviewing all of your monthly subscription charges and seeing if there are any you no longer use that you can cancel. “You can even take it a step further by calling to see if you are entitled to any reimbursement of fees incurred,” she said.
Check Out: 9 Bills You Should Never Put on Autopay
Take Stock of Your Rewards
If you have a rewards credit card, you may be able to take advantage of it to get your finances back in check. “Many people may have accrued an excess of rewards over the past year,” Castro said. “Check with your various cards to see what your rewards balance is and the ways in which you can redeem your points.” For example, some issuers will let you convert points into cash back that you can use to pay down another bill, or get a statement credit to lower your balance.
Set Up Contributions to Your 401(k)
If you’ve been slacking on your retirement savings, now is a great time to start making some progress. Talk to your Human Resources department to see if your company matches 401(k) contributions, and if so, how much. Then set up an automatic contribution that’s at least enough to meet that percentage, said James Anderson, founder of savings app SmartMov. After all, that’s free money.
Open an Emergency Savings Account
Being prepared for a financial emergency can give you peace of mind. Plus, you’ll avoid racking up debt if an unexpected bill comes your way. Look into opening a high-yield savings account where you can stash extra funds for a rainy day. “You’ll want your savings account at a different institution than where you have your checking account,” Anderson said. “This makes it a bit more difficult to take from the fund for other things that come up.”
Turn Off Overdraft Protection
Overdraft protection is a feature that allows your debit transactions to go through even if your balance isn’t high enough to cover them. In that case, you’ll be charged a hefty fee. However, you can opt out, which means those transactions won’t go through. “You’ll have less fees with [overdraft protection turned] off and you’ll start to monitor your checking account closer to avoid that dreaded decline when shopping,” Anderson said.
Check Your Credit Report
Poor credit can hinder you in a lot of ways, but it’s possible that your low score isn’t your fault. Credit reports can contain errors that cause your credit to suffer, and it’s possible to have them fixed. Katie Ross, executive vice president for American Consumer Credit Counseling, said you can get free copies of your credit reports here. Review them for any errors and if you find one, you can dispute it on the credit bureau’s website.
Schedule a Credit Counseling Session
Dealing with debt can be hard to handle alone, so try seeking support from a professional. “A nonprofit credit counseling agency can guide you on how to pay off debt in a difficult financial situation,” Ross said. Working with a credit counselor is often free.
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