When you are not in control of your finances things can feel very overwhelming. Struggles with money are very common but in your own situation things can feel daunting and depressing. Let’s look at 10 ways to take control of your finances and improve your life and money.
Why Take Control Of Your Finances?
When you struggle with money it makes everything feel harder.
Being in survival mode with money means you are living paycheck to paycheck, drowning in debt, and thinking way too much about money. It often feels like no matter what happens you have very little control and are constantly losing ground. Bills pile up and decisions get harder and harder to make.
This is no way to live.
Getting control of your money does take work. It will likely take some sacrifices. But it’s worth it to get out of the negative place where you feel out of control with money.
Taking control of your finances will lead to many positive benefits:
- less stress over money
- reduced worry and anxiety over money
- more mental space for other things in life
- freedom to pursue activities besides work
Even if you only follow some of the money tips below, you will be making huge steps toward getting control of your finances.
Once you do these beginning steps you can then reach toward bigger and more audacious goals. Want to be wealthy? Want to own multiple homes? It all starts with getting your finances in control.
Each small step builds on the ones before it. Small actions compound with personal finance.
10 Ways To Take Control Of Your Finances
Now is the perfect time to take control of your finances. The following 10 tips are things you should do in order to get control and stay in control of your money.
1. Change Your Money Mindset
You have to take time to first change how you think about money.
This means gain control of your finances you have to let go of the control money has over you. Money is important but it does not control you or your life.
Stress about money probably consumes your thoughts if you are struggling financially. This makes it hard to think about other things. You have to let this go and free your mind from always worrying about money.
Worrying about a problem gets you nowhere if it’s not combined with action. You have to let go of worry and get proactive!
Decide right now that you will no longer worry and let money control you. Decide that money is simply a tool to achieve what you want in life. Make the decision that you are going to control your money and choose where it goes and what it does.
Making the decision to stop letting money control you is the first step. Everything that follows will build from this place of empowerment.
2. Track Your Spending
In order to control your money you need to know where it is going. This is the very beginning of taking control of your finances.
You probably feel powerless with your money because you have no idea where it is going! It’s hard to plan for savings and the future when you don’t know how much money you will have every month.
Starting with tracking your spending is easy. It doesn’t require any actual changes yet unless you want to make them. You simply need to get aware of where your money is going.
You can do this in many different ways:
- by writing down everything you spend during the day on paper
- use easy tools like Mint that track your spending on debit and credit cards
- use the spending tracker in the Budgeting Bundle
Regardless of how you choose to track your spending, this is a very important tool to use in gaining control over your finances.
You’ll be able to make changes and improve your finances over time once you know what you are spending. If you are tracking what you spend for the first time it can be incredibly eye opening. Many people are shocked to discover how much they spend on food for example.
Before you do anything else, track your spending for three months. You will learn a lot about money and your financial situation just by tracking what you spend.
3. Create A Zero Based Budget
After tracking your expenses you will have a general idea of where your money goes – and where it is wasted. Now you are ready to create a budget for your money.
When you feel like you don’t have any money leftover each month, you definitely need to create a budget.
Creating a budget with realistic expenses is necessary to succeed with budgeting. Take your income for the month and write out a spending plan for all your bills, spending, sinking funds, debt payments, etc. You will want to give each dollar of income a job so you are left with zero at the end.
When you track your spending you might notice areas where you spend a lot. These are areas where you can improve but you should aim to do so gradually. Don’t completely cut these areas out of your budget – just adjust them to a more realistic number! Instead of spending $120 a month at Starbucks aim to spend $75 or $100.
You can and should adjust your budget monthly as you go to improve on areas like this. Each month create a new budget that you fits your needs for the month.
Here are some useful budgeting articles to help you:
4. Ignore What Other People Do
The concept of “keeping up with the Joneses” leads a lot of people into financial trouble.
When you are watching other people and trying to keep up with their spending habits you can often overspend your income. This is the worst financial habit possible and something you need to avoid.
Most of us have been guilty of this at some point, but gaining control of your money means you will have to stop looking to others to decide how to spend.
Your spending needs to be based on your income and nothing else.
Comparing yourself to others will lead you to feel less worthy and also spend more money. Many people get into deep debt because we are spending to keep up with other people. They want to buy a nicer car or bigger home or go on more vacations because they see others doing it.
The best financial habit possible is to ignore what other people are doing.
Focus on yourself. Focus on what you need and want and can afford based on your income.
If you are cutting back and budgeting for the first time this is extremely important!
5. Start Talking About Money
Talking about money is a taboo for many people. Instead of talking about money people will keep their struggles silent so they appear more in control.
Unfortunately not talking about money can put you at a disadvantage financially.
When your family does not communicate about money you won’t be on the same page. This can lead to overspending and money fights.
You must get on the same page with money as your spouse.
Start having regular talks about money with yourself and your family. Schedule one monthly so that you can all sit down and discuss the budget, expenses, and plans for the future. It is critical to get everyone on the same page and focused on the same goals so you can get your money situation under control.
In your money chats you can talk about:
- your budget plan for the month
- how you want to invest your money to grow
- the feelings that money generate
- how to make more money (try some side hustles!)
And anything else on your mind! The more you discuss money the easier it will be.
6. Make extra money.
Once you know where your money is going and how to cut back, the next step is to earn more money.
Making more money is one of the easiest ways to gain control over your finances because increased income can fix many things temporarily. Having more money won’t solve all your financial problems but it will help you a great deal.
Earning extra income can help you achieve the rest of your financial goals.
There are a lot of ways to earn extra income. Depending on your skill set and available time, you can choose a number of different ways to make money on the side.
Here are a few ideas for making more money:
- Negotiate a raise at work.
- Work extra hours to earn overtime.
- Start a reselling side hustle online.
- Sell things in your house you don’t use.
- Open an Etsy shop and sell something.
- Get a second job to work on your off hours.
- Create and sell digital products.
Earning extra income will change your life and help you stop living paycheck to paycheck.
It will also help you achieve all the steps listed below, like building an emergency fund and paying off debt.
7. Build An Emergency Fund
Many Americans have finances so out of control that they could not afford an emergency $1,000 expense.
This means you are constantly living on the brink of a financial disaster.
That is scary.
The best way to change this is to build up a well-funded emergency fund. An emergency fund is a special savings account that you set aside and do not touch except for cases of emergency. It will cover you during disasters, unexpected repairs, job loss and more.
Your emergency fund savings will depend on a number of factors like how much you spend per month, how many income sources you have, how many dependents you have, and whether your income is stable or not.
Experts recommend different amounts to collect in your emergency fund but they all start with at least 3 to 6 month’s worth of expenses. (See how important it is to know how much you spend?)
If you have a big family, are the sole provider, or own a business it’s recommended to have up to a year’s worth of expenses tucked away.
At the very least you should start saving a starter emergency fund of $1,000. Then move up to one months expenses. Next save up for two months worth of expenses. Then three months worth of expenses. It’s ok to start small but keep saving.
8. Pay Off Your Debt
Getting rid of debt is a good next step in taking control of youor finances.
Paying off your debt eliminates things that take away your income each month. Every time you pay off a debt you get to keep more of your income every month. This can propel you toward financial freedom faster.
If you have debt in the form of car loans, credit cards, student loans, or anything else, you should create a plan to pay off your debt.
You can use this Debt Free Planner to help you create a debt payoff plan or any of the great apps.
Ready for Zero will help you pay off loans faster. It can help you pay off credit cards or pay off car loans faster. Just making a slightly bigger debt payment each month will help you get closer to debt freedom.
Having a plan for paying off your debt gives you so much more control over your finances.
9. Improve Your Credit Score
You credit score is key to helping you save money on big purchases.
With a good credit score you will get a better interest rate on loans for things like houses and cars. This means you’ll save a lot on these purchases.
It also can be checked by landlords and potential employers so it pays to have a good credit score.
You can check your credit score for free online through many free online services.
Here are a few ways to improve your score:
- Check your score regularly and know what it is
- Pay your bills on time
- Lower your utilization rate on credit cards
- Pay off credit cards but don’t close them
And here are a few helpful posts with more information:
- What Makes Up Your Credit Score
- Why Having A Good Credit Score Matters
- How To Raise Your Credit Score With Credit Card Use
- How To Improve Your Credit Score
A higher credit score will help you get future loans at a lower interest rate which will save you hundreds to thousands of dollars.
10. Learn About Personal Finance
Knowledge is power – especially with money.
Many people suffer financially because they were never taught about money. Each generation repeats the same mistakes because no one learns about how to handle money.
Learning about personal finance will help you feel more powerful and confident in your choices with money. Knowing more about finance will help you feel more in control and less likely to slip back into old habits.
You can learn more about personal finance by subscribing to my personal finance blog or budget focused YouTube channel.
You can also learn more by reading books about personal finance. There are a lot of different personal finance experts out there that write books, so find one that you can relate to and get inspired and educated.
If you follow all of these steps your will undoubtedly gain control of your money and start working toward achieving big goals!
Mary is the founder of Pennies Not Perfection where she shares her journey to build wealth through online income. She quit her day job in 2021 after she paid off her debt and doubled her 9-5 salary.
Mary's favorite free financial tool is Personal Capital. She uses their free tools to track net worth and work toward to financial freedom.
Her favorite investment platform is M1 Finance, where she built a custom portfolio for free with no fees. She shares her portfolio growth and savings progress every month on YouTube.