There are a lot of people out there that are under the impression that there is a top secret super solution to solving money problems. Some think that if they could just discover this secret, it would solve all money problems and put them on the road to riches. People often spend lots of money searching for this secret, either through buying books that promise riches or signing up with scam companies that say they can settle your debts for 50 percent of what is owed. Often people are searching for a secret solution in all the wrong places.
If you are struggling with money problems, there really is no one super solution. There is no magic wand that can make the problems disappear. The answer to most money problems is a lot more basic than you might think and there are steps that everyone can take to get back on the right track.
1. Create a Comprehensive Budget – write down all of your expenses and compare the total to your monthly take-home pay. This is the first step in identifying what options might be best to solve your money problems.
2. Track Expenses – keep track of your expenses by writing down every single dollar that you spend. Categorize the expenses and at the end of the month review the budget you first created using the newly tracked figures to identify how accurate it really was. If you have never tracked your expenses before, you may find yourself shocked at where the money really was being spent. Knowing where your money is going is one of the most important parts of managing your money; it’s only when you know where the money is going that you can truly begin to make changes and plan for future goals.
3. Prioritize Expenses – If you are running short of funds every month and don’t have enough money to pay all your bills, you have to make some tough decisions on what will get paid and what won’t. Be sure to make a list of priorities; housing, transportation, food and utilities should be on the top of your list.
4. Decrease Expenses – Again, fixing a broken down budget comes down to a few basics. If you don’t have enough money to cover all of your expenses, this is a necessary step. Review your monthly expenses and see where things can be trimmed or cut. Now, I am not talking about simply cutting cable (although cutting or reducing this is something to consider). To truly cut expenses you absolutely have to know where all of your money is going. This is where tracking comes in. By tracking your expenses, you can begin to identify what areas of your budget are unnecessary or excessive. There are many expenses that can be reduced in most of our budgets. You can reduce your cell phone plan, grocery shop smarter, use coupons, cut down on driving, eat out less – pack a lunch for work, find cheaper entertainment, raise your insurance deductible, shop for lower insurance rates, etc.
5. Increase Income – It’s another very basic concept. If you don’t have enough money for all of your expenses, you need to either reduce the expenses or increase your income; a combination of both can work wonders. Look for any and all ways you can increase your income. It can be as drastic as finding a new full time job with higher pay or as simple as picking up a small part time job. But new employment isn’t the only way to increase income. You can try other things like donating plasma. You can get as much as $70 per week for just a few hours of being hooked up to a machine. It doesn’t hurt and it is a great way to knock books off of your must read list.
6. Get Help – If you are struggling to do this on your own, get help! Just make sure you are working with a reputable company that is truly there to help you achieve you goals and not to line their pockets.
These are just a few of the simple steps you can take to get out of financial problems. There is no magic wand when dealing with money problems. It usually comes down to making some tough decisions, making some sacrifices and most importantly disciplining yourself to follow through on your plans.
About the author
Joshua Huffman is an NFCC certified financial professional with The Village Financial Service Center.