Here's a Plan to Tackle Your Financial Worries

Unless you have a lot of it, it's really not that much fun to think about money. In fact, it can be pretty stressful, but it doesn't have to be. Even if the topic of money is an emotionally tense one for you⁠—and it is for many people⁠—smart money management can make it much more a neutral one. The steps below can help you do a financial overhaul.

Bite the Bullet

What is the main money issue that you aren't dealing with right now? Do you need to gain control of your spending problem? Are there past due notices piling up that you can't bring yourself to open? Are you aware that you need to look for a better-paying job, but you've just been avoiding it? Have you been ignoring a mounting debt? You can deal with all of your money challenges, but a great place to start is with the one that you most want to avoid because after that, everything else will seem like a relief. So go ahead and open the scary envelopes, add up your total debt or do whatever else you need to do to get a clear picture of your major problem. Then give yourself a reward⁠—you deserve it.

Make a Budget

Whether you're dealing with one or several issues, making a budget is a great next step. This gives you clarity about what's coming in and going out. Making a budget is usually not a one-step process. The preliminary one that you create will probably need some tweaks as you track your spending over a few months and get a good idea of what your expenses are, realistically speaking. Be sure that you do build in flexibility to spend money on fun things even if you are trying to save or pay off debt since you are unlikely to stick to an overly strict budget. Also, don't forget to include expenses that only come along occasionally, like needing to buy a present for a friend's wedding.

Figure Out How to Save

Your budget will almost certainly show you some places where you're spending more than you realized, but you can look at other ways to reduce your monthly expenses as well. For example, you might decide to get a roommate or trade in your car for something with cheaper payments. You could also refinance your student loans with a private lender. New terms and a lower interest rate could cut years off debt payments, saving you money in both the short and the long run.

Paying Off Debt and Saving

You should aggressively reduce high-interest debts, but you should also work on building up an emergency savings fund so that you have somewhere to turn when unexpected expenses arise. In addition, if your workplace has a retirement plan, you should be contributing to it, especially if your employer offers matching funds. Once you have paid off most of your major debt and you have a few months' work of expenses in your emergency fund, you may want to look at other savings goals, such as putting money toward a house, your child's college education or investments.