You took our quiz, and now you’re ready to face your fears and get your finances together. You’ve been ignoring your money situation for so long now — and you’re optimistic that you can keep cruising. But there’s still that tiny voice in the back of your head asking if things are actually okay. For you, the most important first step is getting a full understanding of your financial situation, which is definitely not as dreadful as you think it is. Once you get your affairs in order, you’ll be shocked by how easy this whole savings thing can be. Next thing you know, you’ll be debt-free and ready to tackle your next big financial goal.
Figure out where your money is going...
Go through your checking account to figure out where exactly your money is going. What are you spending, and on what? Keep a money diary (you don’t have to publish it!) for a week to get a picture of your habits, then make a list of ways you can cut out unnecessary spending. Maybe you buy coffee at the drive-through instead of packing your to-go mug, or find it hard to say no to last-minute social invites. Once you know what you’re actually spending, you can figure out what your priorities are.
...And get a super-clear picture of your debt.
Make a master list of any student loans, credit card debt, lease payments, mortgages, and anything else you’re on the hook for. Figure out the interest rates, then set up a plan to tackle your debt using either the snowball or avalanche methods. Look at what you’re paying toward your debt each month, and do some calculations to see if you can increase those payments. Then, automate them so you don’t have to worry about paying them on time every month.
Streamline your expenses.
Make a list of any subscriptions that you aren’t using and cancel them. Review your employment benefits to make sure you’re opted in to the right offerings for your specific situation (and don’t be shy about asking HR to clarify what certain options mean). Are you paying for benefits you don’t use, or not signed up for something you desperately need? Will your benefits package let you put pre-tax dollars toward something you buy anyway, like a public transit card? Are there company perks and reimbursements you haven’t been taking advantage of? At home, see if there are any services you can downsize — do you need cable and Netflix, or could you live with just one? Do you still get a newspaper delivered even though you only read the online version? Is your cell phone plan’s data allowance way, way higher than you need it to be?
Keep an eye toward the future.
Look at what you’re contributing to your 401(k), or start contributing if you haven’t. Many companies offer a matching contribution, which is basically free money — and who would want to let that go? Set a reminder to increase this contribution by just a small amount each year, and you’ll feel great knowing you’ve started to provide for your future retirement.