Success with money means different things to different people. Some wouldn't consider themselves financially successful until they have a million dollars in the bank, while others just want to take a yearly vacation.
If you want to succeed with money, get started now by following these six steps.
Step 1: Define Success
Define financial success. It might mean retiring early, paying for your kid's college education, or getting out of debt. It could be a combination of all three or something completely different. The way you define it depends on your personal experiences, goals, and dreams.
Write out your definition and refer to it often. It'll keep you motivated.
Step 2: Establish a Budget
A budget is a tool that will help you achieve financial success. It tells your money where to go and allows you to track your spending.
To get started, subtract your fixed expenses, such as your mortgage payment and utility bills, from your take-home pay. What's left is the amount you can put toward variable expenses: groceries, eating out, entertainment, savings, and debt.
Establishing a budget gives you peace of mind. You don't have to guess if you can afford to buy something because you'll already know.
Make a traditional budget on paper, or download a budgeting app. Wally is a useful tool; Dollar Bird is another one. Both of these apps are free but have premium features available for a small fee.
Step 3: Establish an Emergency Fund
Save enough money to cover your living expenses for three to six months in case you're unable to work. It'll keep you afloat until your life normalizes. Without one, you could end up buried in debt. The assurance it provides is well worth the pressure of saving it.
Step 4: Pay Down Debt
Get rid of consumer debt if you have it. When your paychecks aren't going toward debt repayment, you can put them toward retirement, college savings, vacation funds, and charitable giving. In other words, you'll have the freedom to spend, save, give, or invest your money any way you see fit.
Step 5: Recognize Setbacks
You're going to have setbacks. Cars break down, appliances die, and dental emergencies happen. Don't look at obstacles as failures. You'll give yourself an excuse to quit. Instead, recognize them for what they are and make budgetary adjustments. They'll slow you down, but don't let them stop you.
Step 6: Control Your Money
Budgeting, emergency funds, and debt repayment put you in the driver's seat. You work hard for your money, and you should get to decide where it goes. Don't let banks, credit card companies, and student loan brokers decide for you.
When you're debt-free and saving for your future, you're in control. Financial freedom delivers a sense of peace, confidence, and security that will filter into all areas of your life.
However, it's not going to happen overnight. It might take five years to pay off your debt and another five to receive your first rental income check, and that's okay. What's important is that you're in control.
Success with money is easier to achieve than many people realize. You don't have to make a six-figure income or start off debt-free to experience it. You do have to educate yourself, recognize your limitations, and quit comparing yourself to others. Once you do, you'll find yourself on the path to financial well-being, and there's no better place to be.