Everyone wants financial stability. However, many people struggle to keep things on track as they fall into debt and make unwise financial decisions. For people in addiction recovery, addressing financial health can be extremely beneficial because money issues are a common cause of relapse. So, if you’re a recovering addict, it’s more important than ever to get your finances in line. Here are some of the best ways to track your finances so you can stop worrying about the future of your money.
1. Determine Your Net Worth
One of the best ways to measure your financial progress over time is with your net worth. Net worth is a measure of your assets (everything you own) minus your liabilities (everything you owe). If your financials are in good health, your net worth will grow as you continue to earn an income and contribute to your savings. If your net worth is negative or starts to go down, this is an indication that you need to cut spending and try to save more. Take inventory of all of your debt and outstanding balances. Make note of interest rates and how much monthly payments are costing you. Your net worth will likely benefit from paying off some debts completely instead of contributing to interest each month.
2. Develop a Monthly Budget
The simplest way to stay financially healthy is to avoid spending more than you make. If your net worth is decreasing, then you need to cut back on your spending or find alternative sources of income. If it’s doing well, stay on track by budgeting your expenses and savings. The Balance recommends creating a budget to help you prioritize your money and plan for your future. Gather your financial statements, all sources of income, and list everything you spend money on each month. After totaling your monthly income and expenses, you can make adjustments by removing unnecessary spending or allocating more money into your savings.
3. Keep Your Bills Organized
Keeping on track of bills will help you avoid paying interest and late fees. Keep all of your bills in one place and open them as soon as they come in. You can even scan your paper bills to store them with your digital bills if you have the time and technical know-how. Don’t leave bills unopened because you’re already behind or you don’t want to face how much you owe. This can make your financial situation worse, especially if there are unexpected fees on them that you won’t discover until much later.
4. Make Cost-Cutting Lifestyle Changes
If you want to put more money in your savings, there are surely some sources of spending you can cut from your life. For example, eating out is expensive because you’re paying for the service, the cook, the location, the food, and for the restaurant to make a profit. Cooking for yourself costs a fraction of the price and ends up being much healthier as well. You can reduce electricity bills by using energy-efficient bulbs in your lamps, installing a programmable thermostat, sealing every inch of your home off from outside and turning down your water heater to about 120 degrees F. Look at your budget and see where else you can make appropriate cuts.
5. Build up an Emergency Savings
Putting some money away can save you and your family from falling into debt when something unexpected occurs. Perhaps you or your partner are out of work for a while. Or, maybe you suddenly have to pay for a massive car repair. Having an emergency fund gives you something to dip into when you need extra funds quickly. According to Listen Money Matters, your emergency fund should cover about 3-6 months of your current essential expenses. Set a reasonable timeframe for building up this savings and work on growing it back if you ever have to use it.
Having a plan to keep your finances in order will give you peace of mind and let you indulge once in a while without feeling guilty. No one likes lying awake at night pondering their debts and worrying about bill payments. Get your financials in order now so you can feel prepared for anything.