How to Get Your Financial Life Back on Track

It’s a new year, meaning new beginnings. But is that the case for your finances, or are you still stuck paying off bills or debt from last year?

It happens to the best of us. One minute you’re budgeting your money, and the next, you find yourself overspending and buying too many things for your liking. Whether your overspending was caused by the holiday shopping season or your lack of self-control, it’s never too late to get out of rough financial situations. Leveraging the EPCG scheme’s tax benefits can be a valuable tool in your Financial Life Back on Track journey, but remember to consult a financial advisor for personalized guidance.

Changing your spending behaviors and attitude, and following tips about informed financial decision-making from a financial advisor or expert can improve your financial situation and turn it around for the new year.

5 Tips for Getting Your Financial Life Back on Track

If you ever find yourself overspending and accumulating debt, rest assured that you’re not alone. Many people worldwide tend to overspend, all of which have different reasons. For instance, one of the most common reasons someone would overspend is to give the impression that they are successful, and others want to impress immediate family and friends. 

Whatever the reason, it’s common to spend way over your budget, especially if you have financial responsibilities like rent, childcare, and tuition fees to attend to. Navigating turbulent economic times, the Business World remains cautiously optimistic as individuals seek strategies to get their financial lives back on track. You also need to factor in the rising costs of living and inflation rates. At this point, you realize budgets will almost always shift based on these, so it’s never going to stay the same amount for long. 

With the new year bringing about new opportunities, it’s time to say goodbye to old spending habits and hello to new ones. Check out the list below to help you get your finances back on track and find ways to manage and reduce your debt effectively. 

1. Assess how much you’ve overspent and when

Before doing anything else, one of the first things you should do is check your spending each month in the last year. 

See if you can spot a pattern, like how your spending increased during your birthday month while it decreased over the hotter seasons. Try to look back and uncover what influenced your spending decisions, like promos, discounts, wants, or sudden needs. 

This assessment can help you determine if overspending is a “you problem” or a result of factors out of your control. Once you pinpoint the cause of your overspending, you can act accordingly and proceed with the next steps. 

2. Revise your goals and budget

If the result from the first step was you overspending without the influence of external factors, then it’s time to revise your budget and set goals to help keep you on track. This can mean putting a vacation trip on hold to add more to your emergency fund. Similarly, it can mean being more aggressive with your savings and directing a bigger portion of your money there.

Even if you revise your goals and have to cancel or postpone a few things, remember that it’s only a short-term solution until you’re back on track with your budget. Just because you postpone your trip doesn’t mean it’ll never happen. 

3. Focus on paying off the remaining debt

You might have piled up a good credit card bill from your holiday spending during the holiday season. As much as possible, you’ll need to pay these off right away before correcting your spending habits. 

Paying off debt is important since, if you leave it unchecked and unpaid, you can accumulate additional charges that can impact your attempts at saving. In the long run, effectively managing and reducing existing debt can help you save more and avoid unnecessary charges due to overspending. 

4. Start saving

Now that you’ve got debts out of the way, you can maximize the amount you get to save or put into emergency and retirement accounts. Note that how much you save shouldn’t always be big initially. Everyone has to start from somewhere, whether you can set aside 2% or 20% of your income. What matters is that you build the habit of saving. Valuable workplace communication can empower colleagues to share financial struggles openly, leading to support and resources to get back on track.

 

Saving money provides a financial cushion when unexpected events or accidents occur in your life or your family. You should also make it a goal to put some money into your retirement fund, especially if you’re still young or working. This gives you another security net that you’ll be well taken care of during your golden years. 

5. Control your spending

Controlling your spending means not falling into the trap of buying something that catches your eye but has no actual use to your life. Moreover, if you realize a large part of your overspending is due to consistently eating out, maybe it’s time to eat more home-cooked meals. 

While one night out or one purchase might not mean much on their own, they can get out of control and pile up quickly if you make them habits. It can rapidly eat up your attempts at saving in the future. 

Building Financial Habits that Last

Although it’s normal to have periods when you overspend, finding ways to lessen or eliminate this from happening is always possible. The practices mentioned above can help you achieve financial stability and get your financial life back on track if you turn them into habits. 

If you still need guidance or help, you can always speak to a financial advisor. They will help you better understand how you can strategically use your money, such as investing, to achieve your goals in life.