Wondering how to get your finances back on track? We’ve all made decisions that have taken us off course from our financial goals. From getting into debt to blowing our budget, it can be easy to get your finances off track.
But, at the end of the day, we’re all human, and we all mistakes— especially when it comes to money. The great news is that you always have the ability to get your finances back on track with a few simple steps.
7 Steps to Get Back On Track With Your Finances
It’s never too late to get back on track with your finances. Here’s how!
1. Forgive yourself
The first step to getting your finances back on track is to forgive yourself. We all make mistakes, especially when it comes to money.
Beating yourself up over past financial decisions won’t help you move forward.
Instead, take a deep breath, acknowledge your past mistakes, and forgive yourself. Remember, today is a new day and an opportunity to make better choices.
2. Evaluate what happened (but don’t dwell on it)
Now, it’s time to evaluate what happened. Remember, it’s important not to dwell on the past but to learn from it.
Take a close look at your financial situation and identify the factors that led to your current situation.
Did you overspend? Were there unexpected expenses that you didn’t account for?
This is what we would call a root cause analysis. It’s important because understanding the root causes will help you avoid similar pitfalls in the future.
Going forward, you can now plan to avoid those same mistakes.
3. Identify your triggers
Once you’ve evaluated what happened, it’s time to identify your triggers. These are the things or situations that cause you to make poor financial decisions.
There are several reasons why we make rash financial decisions or those that don’t align with our goals.
- Emotional events – Retail therapy is often the result of feeling angry, sad, or worried. Shopping is a common way to distract you from your emotions and give you a quick lift.
- Social pressures – 1 in 3 Americans reports that social media is “very influential” on their spending habits. You can also experience social pressure from those around you. Ultimately, “keeping up with the Joneses” can cause you to make poor financial decisions.
- Advertising – Companies spend billions of dollars counting on you to make impulsive buys. Seeing these very targeted marketing campaigns can trigger you to spend.
- Boredom – Spending money can seem like the solution to boredom. Be mindful of this trigger if you find yourself looking for something to do.
By recognizing these triggers, you can develop strategies to avoid or manage them. Awareness is key to breaking unhealthy financial patterns.
4. Put boundaries in place
Now that you know what your triggers are, you can put boundaries in place to manage them or eliminate them altogether.
Here are some practical ways to do this.
Use cash envelopes
Consider using cash envelopes. This is where you’ll allocate specific amounts of cash for different spending categories, such as groceries, entertainment, or clothing.
This method helps you visualize your spending and prevents overspending and getting into debt. If you’re interested in implementing it, I suggest reading our article on how to use the cash envelope system.
Unsubscribe from marketing
Next, unsubscribe from marketing emails and notifications that tempt you to spend impulsively.
This means unsubscribing from emails and text messages from brands that market to you.
Unfollow brands & influencers
If you find that social media is a major trigger for you, consider unfollowing brands and influencers who may encourage you to spend.
I suggest checking out our article on how to stop overspending if that is something that you struggle with.
5. Update your budget
The next important step in getting your finances back on track is to update your budget.
Review your spending and look for unnecessary expenses that can be eliminated or reduced. The goal is to get back on track to your financial goals.
Consider temporarily pausing or canceling services and subscriptions so that you can have the extra money to get things back on track.
If you’ve gotten into debt, you’ll want to allocate money in your budget to pay off your debt fast. You’ll need to do the same to replenish your savings that you may have spent.
Remember, the goal isn’t to just update your budget. You’ll want to stick to your budget with the help of the boundaries you’ve put in place.
6. Get accountability
Having accountability is a powerful tool for reaching your goals. Specifically having someone to guide, support, and hold you accountable can increase your chances of reaching your goals.
Find someone you trust, whether it’s a friend, family member, financial advisor, or financial coach. Share your goals and challenges with them so that they can provide support and hold you accountable..
Can’t think of anyone? You can always find online communities, like Facebook groups, of likeminded people who can offer accountability.
7. Revisit your financial goals
Lastly, it’s important to revisit your financial goals.
Ultimately, you want to remember what you’re actually trying to achieve with your finances.
Reflect on your personal and family goals so that you’re motivated to get your finances back on track. Make your goals visible so that you’re reminded of them each day.
Keep your goals in mind as you make decisions, and let them inspire you to make better financial choices.
How to get back on track financially
Remember, it’s never too late to get back on track with your finances; however, it takes time and effort. So have patience with yourself and the process.
Forgive yourself, evaluate what happened, identify your triggers, put boundaries in place, update your budget, get accountability, and revisit your goals. These are all of the steps necessary to make changes in your finances for the better.