Are you tired of living in denial and pretending that everything is okay with your finances?
Are you living with a ton of debt and barely making ends meet?
If you’re ready to turn your financial life around, I want to share four ideas that will help you to improve your financial life.
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How to Turn Your Life Around Financially: 4 Key Ideas
1. It’s Not Too Late to Start
Like some of you reading this post, I grew up in a home where financial literacy was a foreign concept. The only real challenge we had in my family was who could spend money faster.
Growing up, I learned that money was meant to be spent, and that you shouldn’t worry about the future. Things like saving, budgeting, and investing were unfamiliar topics in my home.
So fast forward years later, I graduate from college, start working and still didn’t know how to manage, save or invest my income.
Living paycheck to paycheck was pretty much all I knew. I spent every paycheck as soon as it landed in my bank account and spent the next two weeks anxiously waiting for the next paycheck.
I’m sure many of you can identify with me.
In 2007, I discovered Dave Ramsey and started learning about personal finance. I read lots of personal finance books and articles, but I still struggled with managing my finances.
I know how difficult it is to break bad money habits even when you know the right things to do.
Becoming a single parent was the wake-up call that I needed.
If you’re struggling with your finances and you think it’s too late for you, I am here to tell you that it is never too late to make a fresh start.
You don’t have to stay on the struggle bus for the rest of your life. No matter how old you are, you can learn good money management skills.
You can learn how to save, pay off debt and invest. It all depends on how badly you want it.
Many people struggle to change because they haven’t quite hit rock bottom or they have a false sense of security.
Don’t get me wrong. It’s very hard to change bad financial habits especially if you have lived with those habits for a very long time.
But it can be done. It takes discipline and a commitment or willingness to change.
Don’t beat yourself up over your money mistakes since that won’t change anything. Your focus should be on what you are going to do from here on out.
How to Manage Your Money Effectively
The first step is to learn the basics of personal finance. Learn about saving, building an emergency fund, budgeting etc. If you already have a good grasp of personal finance, then your next step is to practice what you know!
You can’t change your finances with what you know, but what you do.
There are lots of great personal finance books out there. Grab a few of them and start reading. I will link to a few of my favorites at the end of this post.
Don’t fall into the trap of thinking it’s too late to take control of your finances.
Yes, it’s true that you would have been in a better place financially if you started earlier, but it’s also true that it’s not too late to start.
It’s never too late to start saving, investing or paying off debt. Now, that’s good news!
2. Consistent Action Is The Key To Financial Success
Like most things in life, taking consistent action is one of the keys to financial success.
Taking consistent action means, you don’t save only when you feel like it, or use a budget only when the mood strikes you. It means you keep doing the same things over and over again until you achieve your financial goals.
If you’re serious about turning your financial life around, you have to take consistent action no matter how small.
One of the reasons many people struggle with consistency is lack of discipline. A lot of people don’t have the discipline or patience that’s required to achieve their goals so they give up if they don’t get quick results.
Here are some examples of things you need to do consistently:
- Pay yourself first
- Save some money from each paycheck
- Live below your means
- Track your expenses
- Use a budget or spending plan
- Reduce your expenses
- Minimize or get rid of debt and other liabilities
- Save for retirement
- Bill payments
What you need to do depend on your financial goals and your circumstances. What’s important is that you’re consistent in whatever you do.
Don’t save $500 one month and nothing for the next six months. You will struggle to improve your financial life if you’re inconsistent.
One thing you can do to help you become consistent is to automate some of your financial tasks. You can automate things like retirement savings and bill payments to avoid late fees.
If you haven’t read it, check out the The Automatic Millionaire to understand how automating your financial tasks can help you achieve your financial goals.
3. Understand The Power of Delayed Gratification
We live in a time where we hate waiting for anything. If we want something, then we gotta have it now.
Every day, we see adverts and infomercials urging us to call this number or that number. “Don’t wait, don’t delay, act now” are some of the common phrases that we hear.
Unfortunately, many of us fall for these gimmicks and end up making financial commitments without thinking of the long-term effect.
This is what Mary Hunt said in her book Debt-Proof Living “I am the first to admit that the countless offers of entitlement and promises of happiness that appear in our mailboxes and on our TVs are more than just enticing…And I know the pain and personal devastation of cashing in on those promises only to find that having it now and paying for it later is not the path to content…”
If you’ve ever suffered buyer’s remorse, you know exactly what she’s talking about. Many of you purchase stuff you don’t need because of fear of missing out even when you know the timing is wrong.
Until you understand the power of delayed gratification as a wealth-building tool, you will continue to make impulsive decisions that will impact your finances.
When you think of delayed gratification as saying no to something now, so you can say yes to something better in future, it becomes easier to control impulsive spending.
Here is a post that does a good job explaining how practicing delayed gratification can improve your finances. Check out Delayed Gratification: The Power to Improve Your Finances
So the next time you want to whip out that credit card, or sign up for another financial commitment, ask yourself the following questions:
- Do I really need this now?
- What am I giving up to purchase this now?
- Do I already own an alternative?
- Can I survive without this purchase?
- Is this a need or a want?
- Can I afford it without sacrificing something else?
- Can I wait a minimum of thirty days before making a decision?
Your answers to these questions will help you figure out if you’re on the verge of making an unnecessary purchase, or if you have a genuine need for the item/expense.
The fourth idea that will help you to turn around your finances is believing that anyone can achieve financial stability.
4. Anyone Can Achieve Financial Stability
Contrary to what many believe, financial stability isn’t just for a privileged few. There are lots of people on low incomes who manage to achieve financial stability in their lives.
All you need is good money management skills and the ability to make good financial decisions (which is a skill in itself).
Financial stability means you no longer live paycheck to paycheck, you’re debt free (or at least have minimal debt), and you have some savings to fall back on if you face a financial emergency.
One common trait of financially stable people is that they are disciplined and they practice conscious spending.
Financial security doesn’t depend on how much you make, but how much you spend and how much you save.There’s a reason why so many lottery millionaires end up broke after a few years.
If your goal is to achieve financial security, the first step is to believe that it’s possible for you to enjoy financial stability.
Once you believe this, you can start doing all the things you need to do to become financially secure.
When you stop stressing about money, then you can begin to live your dream life and focus on the things that are truly important to you.
It’s difficult to enjoy life if you’re constantly worried about paying the bills, making rent or your car breaking down.
You don’t have to live this way if you don’t want to. If you believe that you can achieve financial security, then it’s time for you to align your actions with your belief.
If you’re not sure what steps to take, here are 10 Habits of Financially Stable People.
Let me do a quick recap.
There are four ideas that will turn your financial life around. They are:
- It’s not too late to start
- Consistent action is the key to financial success
- Understand the power of delayed gratification
- Anyone can achieve financial stability
Are you struggling with your finances? What do you think you can do differently to achieve financial stability?
Recommended personal finance books:
- The Total Money Makeover
- The Richest Man in Babylon
- Your Money or Your Life
- The Wealthy Barber
- The Millionaire Next Door