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Budget Building Basics – a 5-Step Guide To Getting Your Finances In Order

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Photo by Leon Seierlein on Unsplash

Dealing with financial difficulties can be a testing time for anyone. It’s important to keep in mind that almost everyone will face these situations at some point in their lives. While this may not offer you much consolation at the moment, it means that there is hope for you because now, there are plenty of reliable support resources based on other people’s experiences. Here is a tried and tested five-step guide on how to get your finances back on track. 

1. Don’t Be Afraid To Ask For Help When You Need It

It takes courage to ask for help. Many don’t realize just how difficult it can be to swallow their pride until they are in a time of need. However, borrowing from someone you trust who you would return the favor for is ideal but always possible. The next best alternatives are small loans from not-for-profit lenders. You’ll find they are more transparent and will not hit you with crazy interest rates like credit cards and payday lenders. They are designed to help you with emergencies and immediate living expenses.

2. Create A Plan For Tackling Debt 

Once you have any pressing, immediate expenses taken care of, you need to start working on a plan to tackle any large debts with long-term action. If the idea intimidates you or if fairly complex, then it may be in your best interest to get some expert guidance. Take a look at free or low-cost credit counseling services available in your community. Service locations can include credit unions, extension offices, religious organizations, and non-profit agencies. Financial counselors are empathetic and can provide you with a tailored plan for you and help with budgeting.

3. Establish Your Emergency Savings

At this time, starting any kind of new savings may seem out of your depth but in reality, it’s entirely possible and very important that you do. You want to re-establish a routine of putting money aside for yourself and also prevent emergency situations like this from reoccurring. Start by setting aside whatever you can spare. Baby steps, even if it’s less than 5% of your salary at first, it is still a start. Your goal here should be to eventually have up to six months worth of your living expenses tucked away in this account for a rainy day.

4. Create A Realistic Budget 

While some thrive from forecasting the use of every single penny in their possession, this strategy will drive most of us mad. Budgeting should not feel overly restrictive or stressful. When determining what your basic living expenses are, keep a note of the numbers that you actually spend and not what you think you should spend. The latter sets you up for failure and unnecessary pressure. Living expenses and debts are your priority but remember, a budget is like a diet; you can change it when you need to and a cheat day won’t hurt, as long as you honor your commitment the next day!

5. Be Patient And Kind To Yourself

Once you’ve completed the above steps, take a moment to congratulate yourself for setting yourself up for a successful recovery journey. Don’t forget to take care of yourself, maintain a healthy diet, and exercise and get adequate sleep. It’ll save you on healthcare expenses for colds and fatigue and give you the mental clarity and focus for making the right decision for you at this time. 

It will take time but keep reviewing these five steps and you will be back on track before you know it.

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