How to Get Your Finances in Order
4 Things You Can Do To Learn How To Get Your Finances in Order
Are you familiar with financial phrases like credit score, retirement savings, debt retirement, or account balances? If so, that’s great, you’re well on your way to learn how to get your finances in order.
If these phrases tend to cause a bit of anxiety, you’re not alone. About 75 % of the current millennial generation feel as you do, according to the National Endowment for Financial Education. This organization was founded in 1972 and is a non-profit 501 (c) (3) foundation with its primary purpose being to help Americans improve the quality of their lives by educating them with basic programs that teach one to make sound financial decisions.
Many millennials tend to shy away from the idea of getting their financial house in order. They feel that ridding themselves of debt and creating an emergency fund is not a sprint, but a marathon. However, just making some small changes in financial habits now can have a significant impact on your financial picture months and certainly in a few years.
The following four steps can be put into practice today to help clean any bad money habits. They will not only get you on the right path but if you stick with your plan for just one year, you will see how to get your finances in order.
Learn how to get your finances in order now to become debt free
1. Make a note of your credit score. It’s a good idea to check your credit score before starting to get back on track with good money habits and also review your credit report. This will tell you where you are financially, and should your credit score not be as high as you would like, these steps can help you to improve it.
It’s important that you establish a history of making your payments on time and also maintaining a good credit utilization ratio. These two things alone can improve your credit score in a short period of time. A good place to look for your credit score is the bank where you have your accounts. You should be able to get this at no charge from them.
2. Create a plan to reduce or eliminate your debt. Gather all of your financial accounts, such as checking, savings, credit cards, mortgage, and calculate your net worth at the beginning of these steps. Don’t let a very low net worth discourage you, this is used to track your progress and also shows you where you need to start.
When you have that finished, create a workable budget that includes paying off your debt. At this point, concentrate on paying off credit card and any other unsecured debt. Apply any extra money to one account at a time until its gone, then start on the next one. When you how to get your finances in order, seeing debt being paid off is beneficial.
3. Create an emergency fund. Your budget should include a monthly amount going to this fund and it’s a good idea to have the transfer done automatically when you deposit your paycheck. Just depositing $100.00 per month will result in a $1,200.00 emergency fund in a one year period.
You should try to increase that amount if possible after debts are paid so that you can have three to six months cash reserve to cover your expenses in case of a job loss or some other serious issue.
4. Start saving for retirement. This is a very important item and you should begin saving as early as you can. If your employer has a retirement plan, start contributing to it, even if it’s only a small amount. Some employers do a matching contribution so it’s to your advantage to put in as much as you can.
We know from experience it’s not easy taking these steps to improve your financial habits, but it will pay off. Take control of your spending and make every dollar work for you, and in a relatively short period of time, you’ll learn how to get your finances in order.
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26 responses to “How to Get Your Finances in Order”
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Gust Lenglet – Platinum Author
The younger individuals need to start saving and also investing now. That way, by the time they are ready to retire, they will have a sizable nest egg and a better life in retirement.
Thanks for stopping by Kellie. Yes, no matter how much financial individuals emphasize to start saving for retirement early, we hear the same excuse. “I’m young and have plenty of time to begin saving for retirement.”
You have some great tips here on the road to wealth building. If only everyone would follow them, maybe we wouldn’t be having the problems we have in today’s world.
Thanks for your comment Lauren. You’re absolutely correct as the current baby boomers who are retiring with very little in retirement money, show. Many are working as they can’t afford to retire.
You’ve heard the expression save first. We always have and we treated debt like a plague it is. We paid off our mortgage early and have lived for decades debt free. It has meant that we can deal with the many curve balls life throws our way like the dentist, new tires for the jalopy, a new roof etc. The best thing though, is it has allowed our daughter to graduate college debt free.
Thanks for your comment Howard, and congratulations for being so well prepared.
Great article for all millennials to get started early on their path to financial freedom. Millennials absolutely must start saving for retirement after they get their first job after graduating.
Thanks for your comment Charles. Yes, millennials, and all others should begin saving for retirement immediately. Unfortunately, so many of these graduates have student loans that they will be paying on until they are old and gray.
Amen Amen! You really can’t save your way to retirement. The skill is in putting your money to work. This is true not only for retirement but for any type of saving. If you’re simply putting money away into a savings account then you’re doing something wrong
Thanks for stopping by Tony. Yes, keeping money in a savings account for retirement, will not produce much. The key is prudent investing so that the money will have a chance to multiply many times over.
Phew, a lot of money.
We’re trying to curb our spending as well, higher income really makes us want to buy more stuff. Right now a new house is draining our bank accounts, but, fortunately, it will get done eventually
Thanks for your comment Sam. I do hope that you are taking advantage of employer 401(k) and other retirement options.
My method to financial independence was a bit different.
The first and foremost tenet is to find balance in your life; I could have made much more money in my life but it would have come at a cost. I went home at 5:30 while the very ambitious stayed and worked until the wee hours. They chose to forgo family time; I chose to see every one of my kids soccer games.
I agree Terry. Family is extremely important and that was the route I took as well.
Thanks for sharing your thoughts. Saving money alone indeed will never get you to reach financial freedom. Nonetheless, it is the important step to begin with in order for you to grow your money that you have saved through investing. Great tips!
Hi Mitzi. Getting in the habit of saving is very important. Once that is done, it’s a good idea to meet with a qualified financial professional to begin investing so that the money will grow.
It really pays to have goals or a list down the things you need to do in order to manage your finances efficiently. I agree with all of the tips here. It’s best to get everyone in the loop so that everyone is on the same page and it’s easy to meet the budget. Regarding investments, make sure to determined your needs first then explore all available financial products well. Longevity is a pressing issue today that is answered best by the appropriate financial product be it a health insurance, long term care insurance or life insurance. Choose what you think will benefit you the most in the long run.
Thanks for your comment Brett. I might add that everyone is not qualified to determine the type of investment strategy, and meeting with a qualified financial professional can help substantially.
Thanks for sharing this great article with us. It makes such a great difference on how we make use of and view our finances. I extremely agree in that settling dues would make it a trouble-free start in freeing yourself from financial debt.
Thanks for your comment Cindy, and your kind words.
Twice monthly and quarterly I have automatic withdrawals from my checking to savings. I don’t even think about it. The money is gone and when I review my weekly standing against my budget that money is not considered, period.
When my savings account gets above a certain amount, I take balance and invest it into a higher earning account.
Hi Stephanie. Glad to see that you are highly disciplined and keep savings a priority. Thanks for stopping by to share.
Great article ?? Cutting down on household bills is for sure helpful. I know it helped me when working to get my finances under control. Another thing that helped me is selling stuff that was just sitting around on Ebay. Always brings in some spare cash ?? Thanks for this article!
Hi Gracie. Yes, a good way to generate some extra cash is to dispose of them by selling. For some reason, our “stuff” seems to accumulate fast.
What a great post to cut the expenses and save money in order to meet my financial goals. I will surely follow these tips.
Thanks Aimee. Glad to see that our article has helped in some way. Come back ofter and share.