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Falling into a financial rut can feel like your life has been put on hold. When you’re trying to stay on top of debt payments and living paycheck to paycheck, you’re not able to save money or make plans for your future. It can get in the way of everything from dream vacations to starting your own business.
Getting a fresh financial start isn’t always easy, but these money management tips will help you assess your financial situation and find the tools to get serious about your finances.
How to Start Budgeting
A budget is your most powerful financial tool, but it’s a difficult one to use well. One of the toughest things about budgeting is being realistic with yourself. People often report budgeting lower than their actual spending.
The issue is that when they make a budget, they try to tackle too many spending habits at once. A better way to make a realistic budget is to tackle one spending habit at a time. Make sure you look at previous months’ spending to set realistic budget limits for yourself.
Plan to update your budget regularly, reflecting new, better habits and changing circumstances. Your expenses, income, and spending habits evolve over time. You’re not always going to be the same person you were with the same circumstances when you made your first budget. It’s okay to shift expenses from one category to another if you’re still saving.
Explore Debt Relief Options to Start Over
Once you’ve created a real budget, you may discover that getting out of debt on your own will take years or may not be possible at all.
When you’re insolvent and unable to keep up with your debt obligations, debt relief options like a consumer proposal can help. A consumer proposal can reduce the amount of money you owe significantly. You can wind up only having to pay back 20 to 30 percent of what you owe, and it stops interest charges and collection actions.
Debt relief options do come at a cost, such as an impact on your credit score. They should not be pursued lightly, but under the right circumstances, they can be the best option to move forward. Get a fresh start for your finances by getting out of the debt that’s been holding you back.
Set Goals That Mean Something to You
Making major changes for your financial health isn’t easy. You’re going to need the right motivation to change your spending habits, pay off debt, and get a fresh financial start.
The best way to make sure that you stick to your new budget is to give yourself meaningful financial goals. Getting out of debt on its own may not be enough motivation if you don’t know what you’re getting out of debt for.
Separate your goals into short-term and long-term goals. A short-term goal might be paying off that credit card bill, while a long-term goal could be opening up your own business or starting to invest for your retirement.
Your financial plan needs longevity to make a difference in your life. Separating long-term from short-term goals can help make it feel more manageable so that you’re less likely to give up on them.
A fresh financial start is within your reach. Try these money management tips to get started.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin