Who says financial check-ups need to happen at the beginning of the year? There’s no time like the present to get started.
Have you ever been to the dentist and been told you have a cavity? No one likes getting bad news, and being told to cut back on sugar intake, floss more, and improve your overall dental health can be a hard pill to swallow. But it’s important to take an honest and objective look at what you could do better. Making small changes can have lifelong positive results.
The same things can be said of your financial health. Think about it: The routine exercise of analyzing your personal finances may conjure up some difficult emotions. Perhaps you already suspect that you’re spending too much money on your daily habits, but you just don’t want to have to face these issues head on. Thankfully, it can be relatively painless to identify the small financial “cavities” that need work, and get back on a budget that can help get you to a healthier place.
Gather as much information on your current and past spending habits as you possibly can. This is easier than you may think: Take a look through your recent bank and credit card statements or even pull out your checkbook. Put all your spending transactions into a spreadsheet or app and categorize them. For example, you might have “dining out,” “clothing,” “food,” “entertainment,” and more. Go with whatever makes sense to you. The more information you can document and categorize, the better you’ll understand the overall picture of where your money is going.
These days, apps and other streaming services make it easy to sign up for what’s initially a “free trial,” but then quickly becomes a recurring (and often expensive) monthly subscription. Take a look at your monthly subscriptions every few months or so and make sure that these services are still valuable to you. Or, set up a calendar reminder for the day before your free trial is due to expire.
There are a number of different ways to tackle paying off credit card debt, from the snowball method (paying off cards with the lowest balance first) to the avalanche method (prioritizing paying off cards with the highest interest rate first). No strategy is wrong; the goal is that you find the one that works best for you. It takes diligence and dedication to pay off credit cards, but the work is worth it to rid yourself of this type of debt.
A version of this article originally appeared on HerMoney.
Want to see how much extra in your budget you might have to put toward credit card debt? Use this “budget for your goals” worksheet (PDF) to review expenses, as well as set short-, mid-, and long-term goals. And link accounts and track expenses to get an overall picture of your finances with this budgeting option (log in required) in your Principal® dashboard.
