Ask any marathon runner how they got started, and chances are they didn't sign up for a long-distance race right off the bat. They probably started out with smaller goals, like a 5K, or even just getting out for a short walk or jog to get their body used to running. The same principles apply to getting your finances in shape. While your ultimate goal might be to eliminate all debt and amass a solid savings account, you may need to start in smaller in order to achieve long-term success. Here are three steps to get started:
1. Assess the situation. Keep track of how much you're earning each month and how much you're spending. Use an app or a notebook to record every single thing that you buy in a typical month—and you may be shocked when you see where your money is actually going. Once you've gotten a better handle on how much you're spending, it will be easier to figure out which expenses you can cut out and to create a reasonable budget for yourself. You may need to tweak the budget going forward if your needs or income change, but at least you'll have a starting place.
2. Set achievable goals. Rather than focusing on big-picture goals, like buying a home or paying off all your debt, start with small promises, like sticking to that budget, putting away $50 per month, or paying an extra amount toward your credit card bill. Writing down these goals or telling a trusted friend will give you more motivation to achieve them. Hitting even small financial goals will give you more confidence and control over your money, and even small payments can make a big difference in your financial security over time.
3. Celebrate small wins. If you have a long way to go before reaching true financial security, it can be hard to appreciate the progress that you’re making on the journey to get there. Recognize your own achievements when you hit a personal goal, like reaching $1,000 in savings or paying off your first credit card. While you don't want to make a huge purchase that could jeopardize your future financial success, a small celebratory splurge may be just the motivation that you need as you move on to your next money goal.
When your financial life is out of control, it can be stressful and overwhelming—and it can start to impact other areas of your life. Starting out with small steps to give you greater control of your money can help remove that stress and build a strong foundation for financial fitness.
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