The last couple of years have been rough for many Americans. The COVID-19 pandemic and subsequent lockdowns forced a lot of people to dip into their savings or completely wipe it out.
According to the Federal Reserve, 200,000 more businesses closed than the number that shut their doors in a normal year. Similar to the Great Recession, Americans are struggling to get back on their feet.
If you’re one of the millions of people who are struggling to recover from the pandemic, don’t stress. There are small steps you can take to get back on a solid financial path. So, take a deep breath, grab your coffee and make a plan.
Get Rid of Your Debt
Getting rid of your debt seems like a no-brainer, but it can feel like you’re drowning if you have a lot of it. Oftentimes, when people go through financial troubles, they’ll use their credit cards to survive. Many Americans only have the cards for emergencies.
The problem with using credit cards to survive is the fees quickly add up. The lender might charge you interest and then compound interest. If you’re trying to get your finances in order, speaking to a professional to get strategic debt solutions is one of the first steps you want to take. An expert will tell you where you stand and help you develop a strategy to pay it off quickly. To ensure you have money left at the end of the month to pay down your debt, you will want to create a budget.
Create a Budget
Budgets sound awful, but once you get the hang of documenting your spending, it starts to become second nature. Creating a budget can seem like a scary task, but it’s really quite easy. You can use free programs to help you do this, or you can create a spreadsheet using Microsoft Excel or Google Sheets.
Once you choose a program, list all of your expenses for the month. This is the most important part, so even if you spend $5 on a cup of coffee on Tuesday mornings, add that to your list. List some goals on your sheet as well. For example, if you want to start contributing to a vacation fund, put that on the list.
After you’ve listed all of your expenses, add up the total amount of money you spend. Then, on a separate line, place your monthly income on the sheet. Then subtract your expenses from your income. If your number is negative, meaning you owe more than you bring home, then it’s time to start cutting your expenses.
Start by eliminating unnecessary spending. If you haven’t used a subscription in more than a month, get rid of it. You want to at least break even.
Save for Retirement
One day you’re going to retire. When you do, you want to be in a comfortable position. Social Security is available to you, but remember, that should supplement your retirement savings. The earlier you start saving for your retirement, the better.
If you are in your early 20s and just getting your career off of the ground, that’s okay, you can save as little as $20 a week. Tuck it away in an interest-bearing account and forget it exists. That money should be completely separate from your regular savings account.
If your employer offers 401(k), join the plan and contribute to it every time you’re paid. Often employers will match what you contribute, basically giving you free money. Who doesn’t like that?
Once you take some steps toward financial freedom, you’ll feel so much better. Just remember, it can be difficult at first, but soon your changes will become second nature.
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