7 Tips To Start Managing Your Finances When They Feel Too Daunting

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A recent survey from Resume Now revealed that 17% of people said their biggest financial stressor was not being as disciplined about their finances as possible. With lives getting busier for many Americans, managing finances isn’t always a priority. You may find you do not always have the time or energy to handle your money correctly.

However, the longer you put off managing your funds, the more challenging it can be to put things in order. 

Here are some simple tips for people who find managing their money daunting to help you start getting control of your finances.

Take a Realistic Look At Your Finances

“Many people find personal finances daunting because they don’t know exactly what they have and don’t have,” said Kyle Enright, a consumer finance expert and president of lending at Achieve. “The reality is — as with most areas of life — that you need to be aware of what’s going on with your money.”

If you’re intimidated by the idea of money management, it’s likely because you haven’t assessed your situation realistically. You want to start by taking a realistic look at where you stand right now so that you can figure out what to work on. Here are some of the key items you should review:

• The amount of debt you have (credit cards, student loans, and personal loans)
• How much money do you have going out monthly in fixed expenses (insurance, rent, cell phone bill, etc.)
• Your variable expenses and your spending on categories like eating out or entertainment
• How much money do you have coming in through your job and other income streams

You won’t be able to manage your finances properly until you determine your starting point.

Track Your Spending 

The next step is to track your spending for a few weeks. This will help you spot areas for adjustment. The good news is that you can use apps or have your banking app do it automatically to keep everything organized. After a few months, you should have a better understanding of what’s happening with your money.

“To gain a clearer picture of where your money is actually going, start tracking your spending regularly,” remarked Janelle Sallenave, the chief spending officer at Chime. “Even taking just five minutes at the end of each day or scheduling a weekly check-in can make a big difference.”

Create a Simple Budget 

If you’ve been neglecting your finances, you’ll want to start by learning about budgeting and creating a simple one you can follow. You don’t want to think of budgeting as some restrictive tool that limits what you can do. You want to view it as a spending plan so that you know what’s happening with your money. There are numerous types of budgets, so you can easily find one that suits your lifestyle. 

Enright elaborated on budgeting: “At the beginning, it’s just a way to write down and know what’s coming in and going out. Once you have a handle on these basics, look at the budget as a tool to help achieve and do the things you want in life.”

Sallenave added insights on the 50/30/20 rule for budgeting:

“This budgeting method allocates 50% of your income towards essential expenses (like rent, utilities, and groceries), 30% towards the non-essentials and 20% towards savings or debt repayment.”

When you divide your spending into these three distinct categories, you prioritize the necessities while still allowing flexibility for enjoyment and future financial goals.

Set Small Financial Goals 

You should try to set small, short-term financial goals so you have a reason to take your finances seriously. For example, you can plan to cut out $100 from monthly fixed expenses by reviewing your subscriptions this weekend. You could also set up your retirement plan contributions with your employer after putting it off for months.

Enright added, “If the goals are important to you, you’ll start to figure out ways to cut expenses or generate more income.”

Automate Your Finances

Enright stressed the importance of taking decision-making out of saving. He added, ” At most financial institutions, you can easily set up a transfer from checking to savings accounts.”

Most experts recommend saving 10% to 30% of every paycheck but you should take some time to determine what you can do based on your situation. 

Sallenave elaborated, “Just like automating your savings, you can set up automatic payments for your bills to ensure you never miss a due date. This is a convenient way to stay on top of your finances and avoid late fees. 

By automating your savings and bill payments, you simplify your finances and have one less thing to feel anxious about. 

Review Your Credit Report

Credit is crucial when it comes to getting a loan or even trying to rent an apartment in the future, so you’ll want to review your credit report. Enright noted that everyone can review their reports from the three main credit reporting agencies as often as once a week at annualcreditreport.com.

You’ll want to review your report carefully to ensure the information is accurate so there aren’t any mistakes hurting your credit. While credit reports are not the same as credit scores, the data in your report is used to calculate your credit score.

Work On Your Debt

“Few investments can top the rate of return for eliminating debt and few steps ease financial stress more,” remarked Enright. “If you can pay it off on your own with the help of a solid budget and either the avalanche or snowball method, do so.” 

The final tip for starting to manage your finances when they feel too daunting is to apply all of the newly found information to make a plan to pay down your debt. Once you’ve started tracking your spending and have a plan for your money, you can approach debt repayment confidently. 

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