3 Ways to Get Your Financial House in Order
Do you ever get the feeling that the more you work, the more you spend? The more you spend, the more indebted you become? You're not alone because many working adults harbor the same suspicions. Fortunately, for most of them, the solution is to reorganize their personal budgets. That almost always entails making a detailed assessment of their current situation.
After that, getting one's financial house in order begins by combing through the monthly budget to identify obvious and not-so-obvious places where improvements can be made. Another weapon in the battle against financial disorganization is having a second source of income, either a part-time or micro job. Building an emergency fund is yet another tactic that helps people shore up their fiscal health. Finally, after you've done some work on income and expenses, check your credit scores with all three major bureaus and make a plan for improving them. Here's how to get off to a good start by focusing on the three most powerful techniques for organizing personal finances.
Know Exactly Where You Stand
Play the role of an investigator as you go through all your debt, income, savings, and investments. It's imperative to know where you stand financially, before making repairs to budgets, fine-tuning income levels, and doing other things to recalibrate your money situation. Put everything under the microscope, including credit card debt, medical bills, monthly household expenses, investments, insurance premiums, savings accounts, etc. Leave no monetary stone unturned as you develop a precise assessment of how much you have, what you owe, and your monthly income.
Minimize Your Monthly Expenses
Working adults who owe multiple student loans can leverage the power of refinancing to put all the accounts into a fresh agreement. That means one monthly payment that often comes with more advantageous rates and realistic terms. When you refinance your current student loans to lower monthly expenses, it's easy to see immediate results. Getting your financial house in order is a multi-step challenge, but dealing with education debt should be one of the first tasks you take on. It's a fact that for many young professionals, college loans make up the single largest line item of their entire monthly budget.
Add One Source of Income
It's easy to get caught up in the quest for expense reduction and forget about the other side of the equation, which is income. Are you doing all you can to maximize your monetary inflow each month? Ask yourself a few honest questions. Can you ask for and get a raise at your current job? Do you have enough time to take on part-time work to generate additional pay? What about a micro job that you could do online for just a few hours per week? As an experiment, explore part-time employment as a way to bring in additional cash. It never hurts to test the waters by checking out the job market and seeing what's available for people with your skills and background. At best, you'll stumble upon a good-paying part-time position. At worst, you'll build up your professional network and see what the current employment scene is like.