Bills. Groceries. Savings. Debt.
All those past-dues and soon-to-be-dues fill your head as you think about your next paycheck and what portion will immediately go toward what you already owe.
Sound familiar? It’s OK — we’ve all felt that way at some point.
But what if instead of spending all that time stressing about your bills or how you’ll actually afford your bestie’s bachelorette next month, you spend some of that time actively managing your money,.
[click_to_tweet tweet=”It’s not that we don’t spend time thinking about our money. It’s that we spend most of our time stressing about it instead of taking ownership of it it.” quote=”It’s not that we don’t spend time thinking about our money. It’s that we spend most of our time stressing about it instead of taking ownership of it it.”]
Today’s guest contribution comes from Jacquelyn Pica, a staff writer at The Penny Hoarder.
If this the year you’ve promised yourself you’ll finally stop stressing about money and start saving, investing and learn to stop overspending once and for all, we’ve got you covered.
Start with these simple steps to stop worrying about money and actually get your finances in order.
This might seem like a given, but let’s be honest. When’s the last time you actually sat down with all of your bills and pay stubs to map out exactly how much you afford to spend and save each month?
Of course, the idea of sitting down and organizing all of your expenses into a spending plan that works can be daunting and stressful. Which is why we’re going to keep things simple.
Start by listing your consistent, necessary monthly expenses, like your rent, insurance, phone bill, etc.
Then do the same with your irregular (but necessary costs) – think quarterly insurance premiums or annual professional membership dues. Estimate your total annual cost for these irregular expenses, then divide by 12 to calculate the average monthly cost.
Once you’ve calculated the total monthly cost of your necessities, you can compare it against your take home pay to figure out how much you have left over to split between your discretionary expenses (i.e. fun money), and your financial goals (like paying off debt, saving and investing).
Before you get around to spending all that fun money though, go ahead make a plan for how you’re going to follow through on your financial goals first – automating debt payments, savings contributions and investment contributions whenever possible.
If the money for funding your financial goals is automatically coming out of your checking account each month, and you already know exactly how much you need to cover your monthly necessities, you’ll be able to easily calculate how much you have left over for discretionary spending (like late night Lyft rides and impulse buys at Target).
In addition to automating whatever as many parts of your spending and savings plan as possible, you can use apps to help keep you accountable and save even more.
For example, you can connect your credit card to the app Trim to analyze your purchases and figure out how much money you’re spending at certain places.
To help you stick to your spending plan, set up spending alerts and let Trim notify you when you’ve gone a little bit overboard with your Seamless spending
After seeing where your money goes, it’s easier to tailor your spending plan to reflect your priorities.
Credit cards, student loans, medical bills, the $50 you still owe your friend from your last girl’s night?
When you have all these different kinds of debts, it can get overwhelming. And it’s easy to lose track of what you owe.
So, what should you do?
Sit down and make a list of what you owe, to whom, your minimum monthly payments and the interest rate on each of your debts.
[click_to_tweet tweet=”You can’t make a plan for getting out of debt until you know exactly how much of it you owe.” quote=”You can’t make a plan for getting out of debt until you know exactly how much of it you owe.”]
Seeing all your debts in one place, along with the total amounts owed and respective interest rates, makes it easier to prioritize which ones to pay off first.
Once you’ve gotten organized and settled on a repayment plan, keep track of your debts – either through a credit reporting site, budgeting app or a spreadsheet – to help keep you motivated and on track throughout the repayment process.
Whether it’s for retirement, your dream vacation or an emergency fund, you have to start saving sometime — even if it’s just a few dollars per week.
To curb the guilt of never saving a dime, download a savings app that automatically saves money for you.
I’m a huge fan of Qapital; I use it religiously and have saved over $1,000 in the last six months!
The best part? I didn’t even have to think about it.
My personal savings are for a trip I’m taking, but this app is also great for building an emergency fund.
If you have the option to contribute to a 401(k) at work, that’s great! Sign up and start contributing a portion of your paychecks.
If you’re like me and don’t understand how to pick your own investment funds for retirement savings, sign up for Blooom. This is a robo-advisor that takes the confusion out of where to allocate funds in your 401(k).
Take a few minutes to check out your credit score, and everything that’s affecting it.
You can use a site like Credit Sesame or Credit Karma, which are both completely free.
You’ll see your credit score along with every factor that goes into it — what needs to be paid off, what should be fixed and where you’re doing well.
It’s also super important to keep an eye on your credit report so you can be on top of any fraudulent charges or credit checks you didn’t initiate.
Credit monitoring sites allow you to set up notifications for any new change on your credit report.
With identity theft running rampant, you’ll want to notify your bank immediately if you notice anything suspicious.
I caught up with Dana Sitar, one of our staff editors and quick-budgeting experts, for her two cents. She’s written about how she only spends 15 minutes each month thinking about her money. She’s also an avid participant in all the time-saving methods previously mentioned.
Even though she’s finally in control of her finances, she still has areas she wants to work on.
Her next steps?
Getting a secured credit card to avoid overspending and applying for a loan to consolidate her unpaid debts into one monthly payment.
Even if you’re doing a good job already — and seriously, kudos! — see if there are other areas where you can tighten up your finances.
These methods are widely applicable, regardless of your financial situation. Once you’ve applied these tips to your financial life, you’ll spend way less time stressing about money, freeing you up to spend more time enjoying just about everything else.
Jacquelyn Pica is a staff writer at The Penny Hoarder. Find her on Twitter @JacquelynTPH.