Do you ever wonder where your money goes at the end of every payday?
Ever struggle to come up with cash when you need it? For example, when your car fails its MOT and it needs an ungodly amount of money to make it pass?
If you do, this means you don’t have control over your money.
But… you’re not alone. In the UK,45% of adults (about 24 million people) don’t feel confident managing their everyday finances, and in the US, a March 2024 survey found that 47% of adults said money hurts their mental health, often feeling out of control, stressed, or anxious.
By reading on, you’ll discover the 7 practical steps to take control of your money immediately.
If you like what you’ve read so far and want to be financially and mentally free so you can live your best life, please subscribe.
Step 1: Realise there’s a problem.
If at the end of the month you can’t say where your money went, and how much went out, that’s a problem that needs to be solved, and fast.
Step 2: Do you want control?
One thing about humans is that if there’s something we don’t want to do… we simply won’t do it. So ask yourself, is this problem of not knowing where your money goes important enough to you to want to solve it?
It might be painful to account for every dollar if you’re not used to doing so. You’ve spent years not knowing where your money goes, so fixing it AND staying on top of it might be annoying initially.
Step 3: Get your bank statements.
Log in to your online banking and get 1 to 3 months of your financial statements.
The more the better for a more accurate view of your spending. If you have 5 active accounts and you want 3 months’ worth of analysis, you’ll need 15 downloads.
If you want to skip the downloads, you can also use apps like Fleur to understand where your money has gone.
Step 4: It’s time to break it down.
Once you’ve got your data, use this simple Excel spreadsheet I created to understand where your money has gone. You won’t need your email address to access it, and it’s free and easy to use.
Step 5: What will you do about it?
Now that you know where your money goes, you can decide what you will do about it. If 20% of your take-home pay goes on takeaways, will you reduce how many takeaways you order from three times a week to once a week?
If 60% is going on your rent, will you try to move somewhere cheaper? Don’t forget, you can also decide to do nothing if you’re happy with your results.
Step 6: Build and fortify.
After you’ve decided what you’ll cut (or not), you’ll know how much “disposable income” you have to build and fortify your financial empire.
Disposable income means how much money you have left over after all your costs are paid. If it’s $100 you have to spare every month, ON PAYDAY, start by paying off any high-interest debt or credit cards you have.
Go into your settings and make this automatic by setting up a standing order. You’re winning if your brain can do one less thing every month. After that’s paid off, build an emergency fund.
An emergency fund is a pot of cash that’s equal to the amount you spend every month for 1 to 6 months. For example, if you spend $3,000 per month, you’ll need to save $9,000 in your emergency fund.
This should last you about 3 months. This beautiful pot of money is how you’ll finally be able to pay for emergencies only. Not holidays or bottle service… emergencies like fixing your car or living if you ever lost your job.
Step 7: How to grow it?
Now that you know where your money goes every month, you’ve cut back where you can, you’ve automated your debt payments and started building your emergency fund, you can start thinking about how to grow your money.
If you’re taking home $3,000 every month, how can you make $3,200 or more every month? This is the stage where I’ve had the most struggles; however, doing this will get you financially free at lightning speed, even without budgeting.
Summary
Now you know how to take control of your money in 7 simple steps, without budgeting or investing.
Step 1: Realise there’s a problem, step 2: Do you want control?, Step 3: Get your bank statements, step 4: break it down, step 5: What will you do about it? Step 6: build and fortify your financial empire, step 7: how to grow it?
By now, you’re part of the 30% globally that’s considered “financially literate”, and that’s a huge achievement. Don’t forget to download your free spreadsheet, which guides you through every step of this process.
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