How to Command Your Finances in 13 Practical Steps.
Updated: Aug 15, 2020
When it comes to money and finance tips, there’s no shortage of information. However, once you move beyond surface-level content, the real quality money tips are a little harder to come by. From experience, I know that money struggles seem to come at the most inopportune times. With all that is taking place in the current climate, for some people, it is difficult not to stress or be concerned about the current state of your finances, business, stability, etc.
There is this common misconception that has been following people for generations, and that is the idea that if I make more money, it will fix my financial woes and will lead to us being happier. Within the last few years, I found that this is furthest from the truth. My husband and I found financial stability when we were making way less money (just one steady income as opposed to two). Unbelievable right? It finally clicked for us that we had to command our finances if we were going to survive in this new territory. We took account of everything, we did not become excessively frugal, but we were more adamant about how we regarded our money. We now had a plan and were no longer just letting our dollars fly out of our pockets.
We used every one of the tips that are included in this article to transform our finances in less than one year. We did this while cutting our income in half, expanding our family, and balancing expenses that we could not just dissolve.
1. Account for all your expenses Gaining control of your finances requires you to know what your financial accountabilities are and the income you have coming in. It is challenging to make a budget or financial plan if you are not aware of your cash flow. It may seem like a daunting or tedious task, but taking an hour or so to dig deep into your current financial state can lead to years of greater financial habits and outcomes.
2. Give your money a purpose and allocate each dollar I make it my duty to inform people that if you do not have control over your money, you can easily spend $1000 as quickly (or quicker) than you can $100. The amount of money you have does not matter if you do not know how to capitalize on it or manage it wisely. We will always find a way to validate a purchase: “it was on sale, that is something I have needed forever; it was time for an upgrade, and so on.” If we rely purely on our emotions and self-logic, we can easily attest to whatever we want or need at any money, which is why it is crucial to make a feasible plan that you can commit to yourself. Pay yourself a portion of all earnings and then allocate the rest to bills, household expenses, savings, investment accounts, or debt repayment.
3. Categorize your financial obligations (essentials, bills, desirables, wants, etc.) I have noticed many instances where people overspend because they had not realized where they are spending their money. I, for one, did not know how quickly $60 grocery trips were depleting my funds, especially once I noted how many times a week I was going to the store. By planning out the main categories of your spending, you will start to see patterns that you can use to make informed decisions. As you begin to exercise better control in the various areas, you will provide yourself with wiggle room to transfer money to other areas if needed; you will ultimately move away from the “paycheck to paycheck” mindset.
4. Do not take on new debt, if possible Before allowing more contractual obligations to take hold of your finances, begin paying down what you already have. Typically, I suggest starting with things that can be tapped into if a real emergency happens while paying down your debt, and you have a lack of a rainy-day fund. Therefore, credit cards, personal loans, and car notes are at the top of the list, followed closely by mortgage loans, student loans, and any other debts (medical, collections, etc.). Of course, you do not have to follow this order, but it is crucial to know what needs your immediate attention and what you can reasonably pay.
5. Do not spend money because you anticipate a deposit Expecting a payment with a low cash balance is a tight spot to be in, and yet it happens far too often. I can also attest to making an on the whim purchase because I was expecting a check or deposit to come through. The drawback is when there is an unseen delay in processing the money, or another bill snatches the payment before you have a chance to use it for what you initially intended. If it is not in your account or free and clear from another financial obligation, do not spend it! Overdrafts and declined payments can be minimal with a little restraint and understanding of your financial commitments.
6. Check your financial accounts regularly We develop a lot of damaging practices when we operate out of fear, ignorance, arrogance, avoidance, and other counterproductive traits. Do not be afraid to check your accounts daily. You must monitor your accounts for your peace of mind because only looking when there is fraudulent activity or payment issues is not frequently enough. Also, this should help to train your brain to spot inaccuracies quickly and to give yourself a chance to monitor the amount of money you are spending on services or purchases.
7. Split payments With the ease of online bill pay, we have many options available to us that can increase our financial capabilities. For many companies, long gone are the days of requiring lump sum payments or threatening customers with prepayment penalties or additional interest. Check with your lender(s) to see if you have split pay payment options where you can break your monthly payments into bi-weekly, weekly, or daily payments (if your account is current).
8. Make timely payments Bargaining power lies with those who are in good standing with their lenders. Extensions, fee reductions, loan forgiveness, and other financial incentives are often proposed to those who the bank or lender finds favorable, regardless of your personal needs. Therefore, it does not hurt to keep a good relationship with those who decision making power over your financial endeavors.
9. Get the full use out of products you already have or make it yourself I am not a minimalist, per se; however, I am keen on purchasing items that are multipurpose along with being safe for my family and the environment. With that said, some products I may spend a little more for, but the value of the product greatly exceeds the purchase price for me. Even still, there are times where splurging may not be in the budget, so as a cost alternative or to stretch the product or food, I suggest making it yourself. That way, you know the ingredients, material, and other specifications, so you have greater control of what you spend and include to make the end result.
10. Understand the difference between value and excellent marketing We live in a consumer-driven society; literally, everywhere you turn, you are being marketed to. Is that a bad thing? It depends on how you view “things” and the amount of control you command over your finances. Add in social media to already demanding social circles, and you have the recipe for an “I got to have it” buying culture. Influencers, well-meaning family and friends, will convince you of unhealthy and unnecessary purchases because its “trendy” or a “staple” that you must have. But let me tell you, marketing is a powerful tool that is all about gaining your trust to be able to persuade your actions.
11. Have an accountability partner Having a trusted confidant is invaluable. Financial wins and struggles can be a point of contention, but it does not have to be. Maybe you, too, have noticed that there is a shift in a way that we discuss money, we, as a society, or becoming more open and demanding of financial literacy. If seminars and workshops are not quite your cup of tea, have a trusted person or company that you can seek when you have questions or concerns.
12. Shop around and negotiate contract renewals Automatic payments and renewals can be a lifesaver when trying to prevent late payments and additional interest fees. However, if you do not stay abreast of these contractual renewals, you may be committing yourself to higher payments instead of leveraging your long-term customer relationships and solid payment history. Most companies operate under the premise that a loyal customer is cheaper to keep, so keep that in the back of your mind when they are increasing your term plans, and you have proof that you have been a loyal customer. In many industries, competitors are strictly competing on price because their services, skills, and capabilities are comparable; be sure to utilize your purchasing power fairly.
13. Seek help If you have tried to follow self-help money steps before and do not feel that you are making satisfactory changes, this is a great indicator that you may need professional assistance. Vital help can come from a financial advisor who can help you to create long and intermediary plans for your finances. Therapy and finances are not often seen as complementary, but the way we feel and regard money can stem from our upbringings, traumas, and other cultural influences that exist in our day to day lives. Do not be ashamed or reluctant to invest in knowledgeable professionals who can help get you on the right track and keep you there.
Research has shown that more money is not necessarily the key to a prosperous life; instead, a more considerable amount of emphasis is placed on how you manage what you do have. The Bible cautions us in Ecclesiastes 5:10 that “whoever loves money never has enough; whoever loves wealth is never satisfied with their income. This, too, is meaningless (NIV).” Please note that a transformation will not take place overnight and that it may not always feel comfortable. Without challenges, we will not know what we are capable of, which limits our growth. The most important thing you can do is to take one step at a time, and if you stumble, do not quit, start over where you currently are, and know that you worthy of having financial peace and control.
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Trying to get on the same page with your significant other? Check out our love and finances series: “First Comes Love, Then Comes Finances…?”