When it comes to getting on track with your money, there’s a single place to start that kicks off the process to getting the finances in check.
Lottery tickets. Wait, no, it’s not that. It’s definitely not that.
It’s not about a get rich quick plan or a work from home ad you found on the internet.
It’s a singular starting point to get you on track to financial control. It’s a place to start if not having any debt and being able to spend money without stress is something you want in your life.
The Start of Something Good
The one thing you need to start today if you don’t have one is an emergency fund.
The idea of an emergency fund is making its rounds, and if it’s new to you, you need to start one faster than you can say, “Debt is a silent killer.”
An emergency fund is the start of something great. It’s the start of financial freedom. And speaking from experience, financial freedom feels damn good.
So What Exactly is an Emergency Fund?
An emergency fund is money set aside for a rainy day.
It allows you to pay for emergencies such as car repairs or unexpected medical expenses without having to put charges on credit or borrow money from anyone. This makes emergencies a little easier to manage, and avoids them putting additional stress on the budget.
One thing to remember is that an emergency fund should not be treated like a savings account. Meaning it’s not to be spent on new shoes or to cover going out on a Friday night. It should only be used when there is an expense that is out of your control.
The recommendation is to start with $1000 that you put into a savings account.
Now, it doesn’t mean that you need $1000 up front. If money is tight, it simply means that you start to put money aside, maybe $100-200 a month, until the emergency fund is built up.
What if Something Really Bad Happens?
While $1000 is a great start to cover the unexpected, there are things that happen in life that require a little more than a grand can provide. These are things such as losing a job, which may set you back a lot more.
It may take quite some time, but you should strive to have at least three months of expenses packed away to prevent going into a stronghold of debt. If that seems like an overwhelming amount, don’t fret.
Just focus on getting $1000 first, and a more robust emergency fund can be built up while you’re paying off debt.
What if There’s No Extra Money?
Usually when you’re trying to get a grip on finances, there’s no extra money just laying around. You’ll need to free up some margin by cutting some expenses in order to have money to put towards savings.
If you really want to get control of your green, it will likely mean giving up some things you’re used to having.
Often times we think we need something in our lives, when in reality we are just trying to keep up with the Joneses. Cable TV, having a brand new car, electronics, eating out often, and buying things on credit.
There are many things that are not necessities that we can eliminate from out lives, and that may require an adjustment of lifestyle.
A good rule of thumb is that if you need credit to pay for it, it probably isn’t a necessity, and purchasing it should be put on hold until it can purchased outright.
Just because you’ve been without something before or it’s unfamiliar to you, doesn’t mean you can’t do it.
Should it Stay or Should it Go?
When you’re trying to save a little extra money so that you can gain freedom from financial stress, it’s important to know that this will require sacrifice. That sacrifice, however, seems a lot more daunting than it actually is in execution.
Most people find themselves under the weight of debt because they have been living a lifestyle that is unrealistic for them. They have been spending more money than they make.
To gain control again, the roles need to be reversed. There needs to be less spending and more saving.
You need to know that you could be in a lifestyle change for the long-haul, depending upon how much debt and out of control spending has accumulated.
As you eliminate unnecessary spending, you may actually find that it feels better not to have something than it does to have it. Less expenses mean not having to worry about extra things to upgrade, repair or replace.
It doesn’t mean you will deprive yourself of these things forever, it simply means you would prevent yourself from splurging on these things until you’re in a position to afford them without debt.
“Stuff” is Overrated
Getting on track with finances can feel like a daunting process. This is often because it is new and uncharted territory.
Rest assured, it does get better, and it begins a feel-good process of taking control of your financial situation. Being in a place where your entire paycheck isn’t going out the door leads to an increasing amount of possibilities.
It can be tough at times, but it is very worth it.