The beginning of a new year is a propitious opportunity to tidy up personal finances. Therefore, here are the five steps to organize your personal finances in 2019.
Organizing your finances is much simpler than you might think, you just have to follow the following steps:
Diagnose your current financial situation
Every action plan begins with the diagnosis of the initial situation, so you must start with this step. The idea is that you identify in detail the way you handle your money and what your income and expenses are. Do not forget in this step:
- Consider both your active income (wages) and liabilities (debts).
- Consider all types of expenses you have, including those that generate the service of the loans you own. That is, payment of personal credits (including mortgages, auto credit, appliances, etc.) and debts incurred with credit cards.
Analyze your current financial situation
The second step is to analyze the information obtained previously by means of some suitable tool. Preferably use a spreadsheet or some smartphone applications developed for personal budget analysis.
Improve your expenses
The third step in organizing your personal finances in 2019 is to improve the way you spend your money. By reviewing the previous analysis, you can determine how much each type of expense you make influences your budget. Surely you will be surprised how some of your consumption, types of personal tastes , have a significant impact on your expenses.
You must establish a strategy to reduce those expenses that do not imply significant improvements in your quality of life.
Establish a strategy to reduce your debts
If your debts represent a large percentage of your income you must immediately take action. Among the strategies you can consider.
- Do not take more loans, including credit card consumption, until you solve this situation.
- Direct your efforts to cancel debts that are causing you more stress right now.
- Make some temporary sacrifices on non-essential expenses and use that money to increase the payment of your debts.
- Evaluate whether going to a debt purchase allows you to improve your current situation. Learn here about mortgage refinancing.
Establish a savings plan
From the beginning, establish a rigid savings plan that you will apply as soon as you have the opportunity to do so. Although at the beginning this plan may not be applicable, due to your level of discharge, keep it in mind. Once you balance your finances, activate it immediately, this will allow you to correct some behaviors that generate waste of money.