If you have a family and you’re feeling overwhelmed by all your financial obligations, you will first need to take a step back and take a proper look at your situation. You need to know exactly how much money is coming in and going out,and you need to look at areas where you might be overspending. You may then have to take steps to lower your expenses, manage your finances better, or increase your income. Here are a few tips for mothers who feel like their finances are spiraling out of control.
Build a Budget
Building a budget is something that everyone should do, and it is very simple. To get a clear view of your expenses, check your credit card and bank account statements for the last three months. Now check how much you are spending on average versus what you’re making. If there’s a deficit there, then you will have to look more closely at your spending and see where you will need to make cuts.
According to the 50/30/20 rule, you should have at least 20% of your after-tax income left in your account at the end of the month. So, you will need to shrink your expenses down to 80% of your income.
No more than 50% of that income should go toward your rent, utilities, and food. And if you’re spending more than 30% of your income on rent, then it probably means that you are spending too much on lodging and might need to either downsize or earn more money. Everything that’s left can be spent on whatever you like.
Another very important thing if you want to make things as easy as possible is to take steps to either repair or build up your credit. And, if you already have good credit, do everything that you can to keep things that way.
If you don’t know what your credit looks like, you need to get a copy of your credit report from all three credit bureaus as soon as possible. And, when you get your reports, you need to check if you can see any inconsistencies.
See if there is an outstanding account that you believe was paid off, and if there is one, you need to contact the account owner as soon as possible and take the steps required by the credit bureau to have the false entry removed.
If you qualify for credit, getting a credit card even if you already have one could help you in many ways, but you have to make sure that you use the card responsibly. The more cards you have, the lower your credit utilization rating will be,which is a great credit booster.
A good credit card can also allow you to save on your most important expenses and even get a few freebies. So, consider the option if you feel like you’re responsible enough, and see if you could get additional accounts with various other services, as long as you actually need them, of course.
Now would also be a good time to start looking for a monthly bill tracker. You can use things like pen and paper or an online calendar for this, or you can use one of the many monthly bill tracker apps available online.
Late payments are one of the worst things for credit andhaving a bill tracker will allow you to preserve your credit while taking much of the hassle away from calculating due dates, amounts due, and paying the bills if you’re using an app that allows you to set automatic payments.
If you haven’t started investing in a money account yet, then you should start looking at investing some of your savings in one. It doesn’t take a lot for compound interest to start working its magic, so the earlier you start, the better it will be.
Start researching investment options and robo advisors as well. A robo advisor will ask you a few questions so it can assess your investor profile and give you a few selections of investments that could work for you.
Most of them will be ETFs, which are baskets of stocks that are pegged together either by managers or by an algorithm. ETFs are considered safer than individual stocks since they can allow investors to invest in large swaths of the market or in specific indices. While they are not going to make you rich overnight, they can help you beat inflation and build a solid nest egg for yourself if you reinvest your gains, so start learning about them as soon as you can.
If you’re currently struggling to stay afloat and feel like you’re in way over your head, take a step back, and analyze the situation. Then take the steps in this article to start climbing your way out.