This post is contributed by Jason Dirkham.
If you’ve found yourself in a poor financial situation, you know exactly how uncomfortable it can get. This is even more true if you have a family to look after or if you run your own business. But while it can seem bleak, it’s by no means impossible to pull your finances back together.
Once you’re in better financial shape, you can start to build your finances over time to give yourself more financial security and freedom.
Financial Triage
Think about your finances as a patient, and you’re the doctor trying to work out how bad the situation is and how you can fix it. The first step is to inspect the patient and diagnose the problem. Thankfully, this is easier to manage with a bank statement than a real person.
Review your bank statements over the course of at least 6 months to a year and compare your income and expenses over time. This will allow you to see a distinct pattern of your financial health.
Do your expenditures outweigh your income? If so, what are you spending your money on? Can you cut your spending? Are you repaying debts?
Write everything down, then use this information to create a budget.
Creating a Budget
If you’re in a financial pit, you might need to create a harsh budget to drastically reduce your spending. Identify unnecessary expenses and reduce them as much as possible. Do you have any subscriptions you don’t use? Cancel them as soon as possible. Now, what about subscriptions you do use? You may have to make sacrifices to your ordinary quality of life to reach your financial goals.
You should also cut down on eating and drinking out, and consider changing your food budget to more basic options. Go for free or cheap entertainment options rather than more expensive options.
A crash budget might not be sustainable in the long term, but it can be excellent for rapidly saving money. This money can then be used to pay off any outstanding debts as quickly as possible. Rather than paying the minimum on all of your debts, put your money into paying them off now. This will free up more finances and even improve your credit score.
Financial Aid
Depending on your circumstances, you might be eligible for financial aid that can help you to get out of a bind. For example, if you own a small business, you could get a small business grant that will allow you to inject funding into your business. This way, you aren’t pulling as much from your personal finances to get things off the ground. You can then potentially earn more money from your business.
Spend some time doing some research into different grants, charities, tax breaks, and other resources that can help you in the short term. Sometimes a helping hand is all you need.
Saving and Investing Your Funds
Once you’re in a better position, you can think about doing something with your money. Saving is a more secure option, as your money isn’t going anywhere. It is there if and when you need it.
But while investing has more risk involved, it also has much more benefits. If you find a stable investment opportunity, you can potentially build your wealth and collect regular dividends. Always do your research when looking for investments and follow the advice of experts such as Jonathan Martin NFL who have found more secure and reliable ways to use money.
