Sometimes the hardest thing about trying to sort out a budget or get ourselves out of debt or grow our savings is knowing where to actually start.
How do I even create a budget?
Do I tackle debt first?
Do I start saving first?
Do I tackle debt and save at the same time?
What do I want to save for?
How do I invest my money well?
So many questions!
The first place you really need to start is to determine what your financial goals are. Without creating clear goals for yourself, I can almost guarantee that you’ll be living pay-check to pay-check and when it comes time for you to need a deposit or a big car service comes up it’ll add unnecessary stress.
If you have clear financial goals, it’ll be much easier to break down the steps to get to them and to living in a place where finances don’t stress you out.
If your goal is to get rid of all your commercial debt (being personal loans, credit cards, Afterpay) before you even think of anything else, then making sure that when you get paid you have enough to cover regular bills and general expenses and then throw everything left over at your debt.
If your goal is to chip away at debt and saving for a holiday is the primary focus, then you need to work out what your minimum repayments are for your debt and make sure they’re paid, and save as much as you can.
If you’re unsure what your goals are, then your first step would be to spend some time figuring those out. What do you want your life to look like financially? Do you want to live pay-check to pay-check or are you after more freedom and flexibility? Do you want to go on a holiday, and if yes, when? Do you want to buy a home? How do you want your life to look when you reach retirement? (it’s never too early to be thinking about that).
So, step one – determine what your financial goals are and write them down.