Financial goals

Budgeting is the most important thing you can do is be financially successful. People can make a lot of money and still struggle financially if they do not manage their money well. Budgeting has two important parts–creating a budget and sticking to it.

Setting up a personal budget for the first time may be intimidating, but you shouldn’t let that stop you. Tracking your income and expenses for the month can not only help you get a better picture of your finances but it can also help you plan better for any financial decisions. For example, looking at your spending may help you differentiate between things you want and things you need, and that can lead to a change in spending habits. Once you’ve decided to set up a budget, it can be as simple as using a budgeting app.

Repay your debt

Getting out of debt is another key step to taking control of your finances. A budget will give you a pretty good idea of how much debt you owe and what means you have to repay it.

The first step is to prioritize paying debt with the highest interest rates off as soon as possible (most likely your credit cards). By doing that you can reduce the amount you pay in interest. For example, if you have $10,000 in credit card debt and pay 19 per cent interest, you’re paying $1,900 per year in just interest cost. By discharging your highest interest debt first, you’re not only bringing down what you pay as interest, but you can save or use that money elsewhere.

You should start by setting up a debt payment plan, then make a commitment to stick to your payment plan all year long. It is also an incredible feeling to be debt-free. You have more freedom to do the things that you want to do. You achieve greater job flexibility and more peace of mind. While it may take some sacrifice to make it happen, it is worth the effort. 

The Balance