A messy financial house means big problems for families. It’s often intimidating and terrifying to sit down and dissect your finances, but it’s necessary if you want to live a life that allows for financial freedom and comfort. Your finances cannot be a mess if you have any hope of living a stress-free life, which means it’s time to learn how to keep your finances in order.
Know What You Make
You cannot figure your finances correctly if you’re unsure what you make. This means you need to know what you bring home each month. It’s surprising how many people are aware of their gross income but have no idea it’s not the same as their net income. You might make $100,000 per year, but that’s not how much money comes home with you annually to spend on expenses.
Know What You Owe
In addition to knowing what you owe creditors, you need to know where every penny goes each month. Gas, utilities, clothing, entertainment, housing, insurance, and every other expense you pay each month must be accounted for if you want to get your finances in order.
If you want to reach financial freedom and success, you must first pay yourself. You are your most valuable asset, and you should pay yourself accordingly. Now is the time to issue yourself a paycheck just as you would an expense you owe each month. Pay yourself before you pay anything else, and then use what’s left over to pay the bills and live.
Use A Budget
It’s not enough to simply create a budget. You must actually use it and never deviate from it. Make it a game to see if you can not only stay within your budget each month, but if you can stay below it each month. The more you save each month, the more you get to put away into savings. This is good for your family when there is an emergency or when there is something else you want such as a down payment for a new home.
Talk Openly About Your Finances
One of the most devastating things you can do is not account for financial discussions. Talk openly about money with your spouse and family. Talk about what you can afford, what you want to afford, and how you’re spending your money. The more open you are about it, the better you are at managing your budget.
Your finances are the most important thing in your life, and you must treat them as such. Ignoring them and failing to make them a priority is all it takes to send yourself spiraling out of control when it’s time to retire, send the kids to college, or put money down on a new home.