Tonight, I’ve got a challenge for you: sit down with a glass of wine and your computer. If you have a significant other, he or she should join you too. As in a bit over an hour, you’re going to take some simple steps that will go a long way towards helping you to improve your financial health and show you how to manage your money.
It’s unbelievably important to make sure that you do a review of your financial position from time to time – especially if you haven’t done one before.
But it also can seem completely overwhelming. Should you focus on tackling your debt, reducing your expenses, increasing your income…or all of the above??
It’s ok, no need to hyperventilate just yet.
Instead, you should follow the steps below. They’ll allow you to consider specific issues at each step and then use that information to help you make decisions in later steps.
It will take you an hour or two, but they’ll be the most important hour or two that you’ve spent in a long time.
The money management steps you should follow
1. Find out just where you stand financially
The first step in getting your finances in order is figuring out where you stand financially at the moment.
After all, it’s a bit hard to fix something if you don’t know where it’s broken!
My favorite tool for this is Personal Capital. It’s completely FREE and helps track your entire financial situation.
The best part is that you can connect all of your accounts (including bank accounts, investment accounts, retirement accounts etc.) and bank cards to see just where money is going in and going out.
It’s a great way to see where you are financially as well as to track improvements on an ongoing basis. The fact that it’s free is pretty incredible too, so I highly recommend it.
And if it shows that you’re consistently spending more than you’re earning or that you’re just breaking even and not putting anything into savings or investment accounts, it’s time to have a good look at your financial habits and figure out how to change them.
You may not even realize that you’re spending too much. After all, it can be easy to, say, buy lunch every day and not notice until the end of the month that this has cost you several hundred dollars.
So take this opportunity to talk with your partner (or just yourself!) about where you can start cutting back or increasing your income to set yourselves up for the future.
You can even apply many of the tips from this article towards that goal!
It would also be a good idea to check your credit score. It’s something that you can easily work at improving if you need to – which you won’t know until you check it!
For this, I’d recommend Credit Sesame. It’s also totally free and shows you not only your credit score but also ways that you can increase it. Super useful!
2. Deal with your debt
Now that you have an idea what the problem areas are, it’s time to start working at fixing them.
And if you have any debt, then that’s definitely a problem area.
Not to bash you over the head with the same thing over and over again, but it’s pretty much impossible for you to improve your financial situation if you’re paying huge amounts of interest each month.
More information can be found in this article, but essentially, I recommend that you order your debts from the one with the highest interest rate to the lowest.
Some people suggest that you should pay off your debts in the order of the smallest amount owing to the largest. While it’s true that it can feel great to get rid of your debts like this, it will cost you more in the long term – sometimes literally thousands of dollars more.
In any case, now that you have all your debts set out in a list, including how much is owing on each one, you should be able to clearly see just what you need to do in order to become debt-free.
You can even use the steps in the rest of this article to do so!
It’s tough to do, I agree. But trust me, it will be so, so worth it at the end.
FOR MORE INFORMATION: THE DEFINITIVE GUIDE TO GETTING OUT OF DEBT
3. Make sure your bank accounts are set up to save you money
Did you know that with about half an hour of work, you can set up all of your regular expenses and savings to be dealt with automatically each pay day?
This is especially great if you’ve found yourself being hit with overdraft fees or late payment fees in the past.
We all make mistakes, but let’s be honest: these are pretty dumb, as it’s essentially kissing goodbye to your hard earned money and sending it off to your bank.
But by using this strategy, you’ll never be slugged with one of these fees again.
It’s incredibly easy to do and could save you hundreds of dollars.
And better yet, it ensures that each month some of your money is going towards paying off your debts and into any savings or investment accounts that you have – without you having to do anything.
This makes it much easier for you to ensure that you’re not over-spending. After all, you can’t over spend if the money has already been allocated to other (better) things!
FIND OUT MORE: HOW TO AUTOMATE YOUR FINANCES AND SAVE MONEY IN 3 EASY STEPS
4. Open a high interest savings account
When you were automating your finances in the previous step, where did you tell it to send your savings?
If you’re only using a standard checking account rather than a savings account, then you’re leaving money on the table.
Instead, consider signing up for an account where you can earn amazing interest on your money.
My favorite is CIT Bank Premier High Yield Savings Account. It has no fees to open or maintain and is FDIC insured.
But the best part is that the annual percentage yield is 1.55% – that’s 22 times more than the national average.
To find out more and sign up, click here.
5. Check if you’re paying too much for your existing accounts
After you’ve made sure that your savings are earning as much interest as possible in the previous step, you should take a look at your other accounts.
Specifically, if you’re paying any fees, you’re likely paying too much.
There’s an incredible amount of competition for your money these days, including a range of accounts that are fee-free. Luckily, you can use this to your advantage.
And did you know that it costs a bank about $1,000 in marketing costs to replace you as a customer? Suffice to say, they really really want to keep you.
So if you call up with information on one of their competitor’s offering a better deal on an account, it’s highly likely that your bank will either match or beat that deal, just to hold on to you as a customer.
To find out more, including a script with exactly what you should say to the bank to take advantage of this, check out How To Get Your Bank Fees Waived.
6. Check to see if you can cut any unnecessary bills
Firstly, if you’re trying to save money and you have any subscriptions that you don’t use, such as gym memberships or Hulu when you find yourself checking Netflix more often, you should seriously consider cancelling them altogether.
(I’m absolutely guilty of that. I got a cell phone through work and then kept my personal phone plan for three months “just in case” i.e. I was too lazy to call and cancel it. Goodbye, money.)
But for those subscriptions that you do use, have you looked into whether you’re paying too much for them compared to what you actually use, such as your internet or cable TV? Or have you checked whether there’s a better deal on your car insurance compared to what you’re paying now?
If so, you may want to look into Trim.
I recently stumbled across this app and the money-saving possibilities are pretty incredible.
It looks at your recurring subscriptions and finds out just how you can cut back on spending. For example, it can negotiate your internet and cable bills, find you better car insurance and more – all automatically.
Better yet, it’s totally free to try (although they will take a small fee from any money that they save you).
Take a look at Trim today to see just how much money you can save on your bills.
7. See if you’re paying too much for your insurance
As you’re sitting down and going through your finances, this can be a great opportunity to check on your insurance.
For example, are you paying too much on your car insurance? How about your health insurance – are you paying the right amount for the right level of coverage?
These are all important financial decisions to look at – not only to make sure that you’re paying the right amount now, but also to make sure that you and your loved ones are protected financially if something unexpected happens.
Luckily, the power of the internet makes it very easy to check on all these things. For example:
The Zebra allows you to compare over 200 different car insurance companies at once for free. They claim to have helped over five million drivers save an average of $368 per year on car insurance. Simply enter in your details and see in just a few seconds whether you can get a better deal than your current policy.
eHealth Insurance allows you to search for health insurance policies in its database of over 10,000 plans from over 180 health companies in the US, meaning that it’s highly likely that you’ll be able to find an amazing deal for your circumstances.
Simply click here to search for free to see what’s on offer for you.
And as the icing on the cake, eHealth Insurance also has a tool that allows you to compare plans for prescription medication, stating that they allow people to save from $1,616 per year. Which isn’t anything to sniff at!
8. Make sure that you’re getting best value for money on your day-to-day expenses
No matter how much you cut your spending, some expenses are obviously inevitable, such as groceries.
But it’s been shown time and time again that there are some things that will always result in your spending more.
In the case of groceries, these include going into a supermarket unprepared (“I guess we need more chicken…right? Did anyone check if we ran out?”) and going into a supermarket more frequently (“I’ve just popped in for a loaf of bread, but I guess I could grab a Kit Kat while I’m here…”).
If that sounds like you or your partner, prepare a strategy on how you can address this in future to make sure that you’re only spending exactly what you need.
I have a number of tricks for doing this, with some of the main ones being that I meal plan, I refuse to step foot inside a supermarket without a shopping list and I do freezer cooking to save a TON of money and time.
FIND OUT MORE: HOW I SAVED $300 ON MY GROCERY BILL IN ONE MONTH
And if you want to save even more money on your groceries, perhaps take a minute for both of you to download an app that will save you some money during your weekly supermarket visit.
The one that I’ve found with the best deals is Ibotta. You can generally get between 5% and 15% back on your groceries, although sometimes there are even better deals available (I’ve seen a few stores offering up to 40% off, for example).
For very minimal extra work, you can make a few dollars back each week on your groceries, which quickly adds up.
And even better, if you sign up through this link, you’ll get a $10 welcome bonus.
Not bad for five seconds of work to press “install”.
RELATED ARTICLE: 12 EFFORTLESS WAYS FOR YOU TO MAKE MONEY WHILE SHOPPING
While this may not be the wildest date you’ve ever had, whether it be with your partner or just you and your financial records sharing a nice glass of wine, it may be one of the most important ones you’ve ever been on.
Especially because making sure that your finances are in order is critical to ensure that you’re setting up your financial future for success.
And the sooner you get your finances sorted out, the sooner you’ll be on the path to financial freedom.
After you’ve done this once, consider scheduling a money date once a month to just go over your finances with your partner. And then once every three months or so, you should do a full review following these steps again.
It will get easier each time as you consistently address money issues. You’ll also be able to quickly see just how much your financial situation is improving – which is a great motivator to keep going!
What steps have you taken recently to improve your financial situation? Let us know your financial wins!