What do you do if your finances are a mess?

For you to know what you need to fix, you have to look at the reality of your situation. Doing an audit of your wallet is key to know how your financial engine is working. Areas to look at: your income streams, budget/bills, spending, rate of savings, financial goals. When your audit, you can align to a better financial path. The foundation of doing this is that you give yourself grace to get into gear to get on track!

One of the hardest steps is looking at your financial position. It often helps to do this with a close friend or loved one who can help you from a holistic standpoint. You need to be honest with yourself in order to begin to fix the problem. Don't bury your head in the sand

Sometimes working with and discussing your own personal financial chaos can be challenging for us. Get help if you really need it. If you are uncomfortable with a friend or relative trying to help you, try reaching out to someone willing to help in the financial field, someone you don't know. Sometimes a third party can be easier for us and may make the hard dose of reality easier for us to intake and digest.

Understanding your financial situation is the first step. Create a budget by listing all income sources and tracking monthly expenses to identify where your money goes. Distinguish between necessary and discretionary spending to find areas to cut back. This helps redirect funds towards paying off debt or building savings. In my experience, setting a realistic budget is key to financial recovery. I once helped a client streamline their IT budget by identifying redundant software licenses and renegotiating vendor contracts, leading to significant savings that were reinvested into strategic projects.

Knowing where your money goes is critical for financial goal setting and achievement. It highlights what's possible and where you need to make adjustments. Is more income needed or a reduction in expenses?

The first step to gaining back control of your money is knowing where it's going. When you analyze what has to go out, what you have coming in, and what is actually going out (not just what you think you're spending), you can see where you can make changes. Am I spending too much? Am I not making enough? You don't truly know until you look at the numbers.

I had no option to do this when I moved to London on a very low salary. I created a spreadsheet of all my costs then ranked them in order of importance, then for the unnecessary costs I would cut them initially to see how a real life month went before gradually drip feeding them back in as a reward for being disciplined with my finances

Sometimes taking on debt is necessary but it's important to remember that you can't move forward when burdened by debt. Having a plan, no matter how small can help you move in a positive direction to get ahead of your debt burden.

For handling debt I look at the interest rate across each of my outstanding balances, which one is costing me the most? I then prioritize the highest costing debts before the lowest. That's if I cannot amalgamate debts into one creditor

If debt is necessary to make ends meet, consolidation could land you in a deeper hole because those paid-off cards are tempting to use. This is a good option when you have a clear plan to reduce the debt and some cushion in your cash flow.

Consolidation can be a helpful tool as part of a larger debt payoff strategy, but it often doesn't work on its own. As a financial coach, I often see people who consolidate their debt without making any other changes or a plan to pay off the debt. It ends up making them feel like they're doing something, but really they're just moving numbers around. To make the most out of debt consolidation, you need to make sure that you are no longer accumulating debt and that you can make the payments. Working with a financial coach or counselor can help you make the most of consolidation and set you up for lasting success.

Consolidation is a must. Especially in the current climate. Banks and lenders are increasing their APR by a huge amount which might not seem much month to month but it could significantly reduce your outgoings if you consolidate allowing you to remove debt quicker

A friend or family member can be the best help as they can look at your finances holistically and help you become more disciplined in future months which could help you get rid of the debt quicker

It's very easy to feel ashamed and not know where to turn but this is the most important time to let someone know. There is power in community and in accountability. Even if you don't feel like you need financial help from someone, allowing them to know you are in this positions makes it clear that this is a priority for you and they can help you with other resources while checking on you and keeping you accountable. Additionally they may have some information that can help save you time and headache.

There are ways to review subscriptions that need to be cancelled, budget apps, automated funds transfers and apps with notifications that can be the differentiating factor between over drafting in your bank account and starting an emergency fund. Start with your current bank to see what type of resources you have and then consider free apps that can help. Technology will be able to help you tremendously in monitoring your finances and being proactive.

One thing I’ve always found helpful is a little app or piece of software to take the hard and annoying parts out of personal finance. Our finances can become ugly when wet “get behind” on the maintenance. You no longer remember how much you can spend on groceries because you haven’t tracked your spending in a month! Don’t worry, use an app or software to help you automate and keep your tracking up to date!

There can be many reasons why your finances are in a mess. So doing an Root Cause Analysis is critical before taking or deciding any kind of action. Broadly there could be two reasons: 1. Internal behaviour pattern 2. External event The reasons could external and out of your control like medical emergency, unplanned expenses, etc. In such scenarios, we need to find ways to do damage control by focusing on factors like insurance, emergency funds, etc. For second scenario where factors are more in control like excessive spending, too many EMIs, using shopping as therapy, etc. First step with decluttering, and we need to be ruthless about it. And patience would be most important virtue to get out of the mess.

What offerings do you have at work? Are there employees programs that offer financial education or planning? Looking at the resources you have like this or key figures on social media can give you leverage within your price point!

It's important to realize that there are plenty of things that led to this point. There are historical implications, learned mistakes/habits from family, fraud schemes, distrust in the financial system and other baggage that plays in to how we view and use money. These need to be factored into the thought process and how you approach solutions. There is no one size fits all.

Here’s some practical advice… If your finances are out of whack, cut back on wasteful spending. Make a budget, stick to it. Pay off smaller debts or consolidate debt into a lower-interest loan and attack those payments. Decide what makes you happy and what you want to live with, what you can’t live without. However, be wise with your spending. Treat yourself but don’t go overboard. I used to have fun, but I limit myself now. I have to save because I want to move a little further away and that costs money.