For anyone in debt, fight lifestyle creepand overtaken by the current state of inflation, it’s all too easy to feel like your finances are in disarray. You may be in the throes of anxiety and assume that you are “bad with money.” But when we live in a state of anxiety, we make worse financial decisions. In order to improve your relationship with money, it’s important to take stock of what you’re doing right. Here are some examples of personal finance victories you can celebrate any time you need to take a step back and feel better about your financial health.
You have a budget
If you have a budget, you are already in better control of your finances than most. Sure, having a budget and stick to a budget are two different battles. Still, if you’ve done at least one, you’ve taken a crucial first step to knowing the state of your finances.
If you don’t have a budget yet, it might be your sign to create one now. Again, it’s not necessarily about setting hard and fast rules for yourself, it’s about understanding your spending habits and setting financial goals.
There are many different budgeting methods you can try to determine the best way to manage your money. A popular option to try is the 50/20/30 method, but in the end, the best budget is the one that suits you. Here is our guide to start your budget.
You know exactly where your money is going
Even if you feel anxious about your spending habits, it’s important to know what those spending habits are. Not knowing where your money is going is a major financial red flag.
To be a more conscientious spender, start by reviewing your bank statement for at least the past 90 days. After reviewing your expenses, you’ll likely discover areas where you can cut back, as well as areas where you didn’t even know you were wasting money (forgotten subscriptions come to mind).
You know the status of your debt
Similar to knowing where your money is going, knowing how much money you owe is also crucial. You don’t want to live in fear and stay in the dark when it comes to your debt. Here is our guide to getting you organized enough to pay off your debt.
You have an emergency fund
An emergency or “rainy day” fund is about one month’s rent plus your insurance deductible. If you’ve saved that amount and don’t have to dip into that amount to pay day-to-day bills, you’ve taken an important step toward building a more secure financial future.
Keep building your emergency fund to get to a point where it can cover you for six months or more. If possible, monitor the amount you save and make sure it increases with your income.
Your Relationship With Money Isn’t Holding You Back
If you constantly feel buyer’s remorse, feel unable to make decisions, and constantly lose sleep over money, something has to change. When you’re sure you’re only spending on things you like and aren’t wasting money on things you don’t like, you’ll make much better financial decisions for yourself.
Putting yourself down for your financial habits can backfire in the form of fear-based decision making. It can help you zoom out and celebrate your personal financial strengths so you have the confidence to continue making smarter financial decisions down the line.