Do you know what Iâve learned over time? Our relationship with money can be as complex as our relationship with sex. It can either be a source of freedom or it can produce anxiety. Personally, I tend to fall into the latter group but have found ways to work through my mental blocks surrounding my finances, with the help of therapy.
Before I developed a financial plan for myself, I felt lost about how to turn things around. It seemed as if it was taking forever to reduce the debt Iâd accrued and it didnât make sense to save money with high credit balances. What helped change my mindset is a suggestion made by a former therapist: Instead of dwelling on mistakes Iâd made, I was asked to sit with my introduction to the concept of money when I was a child. From there, I was given exercises to help me find the root cause of my financial habits.
Itâs advice that Iâve carried with me ever since and it taught me that itâs possible to make healthy financial choices. Things may not happen overnight, but with patience and actionable steps, saving money and reducing debt can become something you feel confident about doing.
Move toward the 50/30/20 rule to create a budget
We may ask ourselves, âWhatâs the point of saving money when I have to [insert responsibility]?â On the other hand, if you feel you could be saving more money but arenât sure where to start, the financial experts at NerdWallet suggest using the 50/30/20 rule:
- 50% of your income for needs
- 30% of income for wants
- 20% of income for savings and debt repayment.
Some accounts allow you to see a breakdown of your expenses. If you are unable to see that within your bank account, you can utilize budget apps such as Mint or Goodbudget. Seeing your expenses helps you determine the areas where you spend the most money; categories such as bills, entertainment, shopping, etc. From here, you can decide which expenses are needs, which are wants, and where you can reduce spending and save.

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Assess your debt and credit balances
If this makes you want to run away from your screen and never return, I donât blame you. This is by far one of the things I dreaded when I decided to get serious about my own finances. Iâd developed an âout of sight, out of mindâ thought process and dealt with overdraft fees, scams, and more because of it. Believe me when I say that I understand. At the same time, being able to truly face our balances helps us become clear about where we stand financially.
Know your credit utilization percentage
Credit can be a good or bad thing depending on who you ask. Regardless of your opinion on it, I think we can agree itâs essential. It determines our eligibility for car loans, apartment rentals, home ownership, and much more. There are loopholes around some things, but for the most part, credit tends to follow us around.
Aside from checking the balance on your credit card and/or accounts, looking at the percentage of your credit youâre utilizing is extremely important. The rule of thumb is to keep your credit utilization under 30% because it impacts your credit score. If you notice your percentage is higher than that, it means youâre beginning to spend more than recommended. Now, things happen in life like unexpected emergencies, so our balances may exist because of them.
Whatever your unique situation is, your credit utilization percentage can help you look at the areas where you can reduce debt. This coincides with assessing your balances.
Pay more than the minimum balance
If you have room to do so, pay more than the minimum balance on your credit card(s). Since interest is already accruing, making more than the minimum payment will save you money in the long run. According to NerdWallet, credit âissuers are required by law to include a âMinimum Payment Warning,â which discloses how long it would take to pay off your current debt if you paid only the minimum each month. Reviewing that warning might motivate you to pay off your debt faster.â

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Invest in financial resources
This doesnât mean spending money on finance courses unless you feel it will benefit you. Instead, read financial books that hold valuable information that can help you find a financial plan that will work for you. Some of my personal favorites are listed below:
Featuring 10 steps to help you develop a healthy relationship with your finances, this is a great tool that goes in depth about everything from budgeting to investing. As a Millennial, this title grabbed my attention, but the length Lowry goes to to make sure readers understand more complicated financial terms and breakdowns held it. This is one of the first finance books my older sister gifted me when I went to college. It covers topics such as student loans and building credit.
Set short-term and long-term goals for yourself
Aside from creating a realistic budget, setting financial goals is by my far one of my favorite things to do and can give you a tangible âwhyâ to your savings and debt reduction plans. Maybe you decide to put a certain amount in savings from each paycheckâmake it automated if you can. It can be a small amount but will add up overtime. If you decide you want to challenge yourself, paying off a smaller credit card/account within a certain time frame may be more suited for you.
Life happens, so itâs OK if your financial situation doesnât look like how you want it to right now. Getting on track with your finances doesnât have to necessarily be your New Yearâs resolution either. It can be viewed as a stepping stone if you havenât been paying as much attention. If you simply want to improve on systems you may already have in place, this can be helpful for that too. From one mom to another: We can make healthier choices in different areas of our lives, one small step at a time.
This article was originally published at an earlier date and has been updated for timeliness.