Financial peace of mind is something many of us strive for, but often it seems like a far-off dream rather than an achievable reality. Here are some practical steps you can take to journey towards financial peace of mind.

• Track Your Spending

The first step toward financial peace of mind is to know where your money is going. Tracking your spending is like having a financial GPS; it helps you navigate through your expenses and identify where you can make adjustments. It involves keeping a record of every purchase and bill payment. This awareness creates a framework for your budget and spending habits. Tools such as budgeting apps or spreadsheets can simplify this process, giving you a clear view of your financial activity.

• Build an Emergency Fund

Life is unpredictable, and unexpected expenses can derail your financial stability. An emergency fund is a financial safety net designed to cover unforeseen expenses such as medical bills, job loss, or, god forbid, bedbugs (it happened to me!). Aim to save three to six months’ worth of living expenses. This fund should be easily accessible, but not so easy that you’re tempted to dip into it for everyday spending. This fund is strictly for emergencies.

• Give Every Dollar a Job

A proactive approach to budgeting is to assign every dollar a specific role. This means deciding where your money should go before you even spend it. By doing this, you ensure that your money is working towards your financial goals rather than being spent haphazardly. When every dollar has a job, you’re in control and less likely to overspend.

• Embrace Your True Expenses

True expenses are those larger, less frequent bills that can disrupt your budget if you’re not prepared for them. These include annual insurance premiums, car maintenance,  vacations, holidays, etc. Instead of being surprised by these bills, anticipate them by breaking them down into monthly amounts and setting that money aside each month. This approach turns large, unpredictable expenses into manageable, expected monthly outlays. Shockingly, these types of expenses can account for 20-22% of your annual spending. 

• Reduce or Eliminate Debt

Debt can be a major obstacle on the road to financial peace of mind. High-interest debt, like credit card debt, can be particularly crippling due to the compound interest that accrues. At GPS we don’t recommend the “Debt Snowball” or “Avalanche” methods to paying off debt. Instead, we take a customized phased approach that systematically lowers utilization rates and transfers high-interest debt to zero-interest credit cards. Keep note of your utilization rate on the new zero-interest credit cards. It’s a mistake that’s easy to make, but keeping the utilization rate of the balance transfers to 33% or less (to help your credit score, but more on that next), and never use that card for new purchases until it’s paid off. 

This can be complex to manage yourself, so if you want some help creating a way to keep track of this and ensure you’re not doing more damage, reach out to us – we’re experts!

• Build Your Credit Score

A good credit score can save you thousands of dollars in interest over your lifetime by giving you access to lower interest rates. To build your credit score, make sure to pay all your bills on time and keep your credit cards paid off in full. It’s a common misunderstanding that carrying a balance on your credit cards improves your credit score. In reality, it’s your payment history that improves it. Also, it kinda goes without saying that, paying no interest is better than paying interest. Regularly checking your credit report for errors and correcting them can also help improve your score.

• Savings and Spending Dollars

Finally, it’s important to balance your savings and spending. While it’s essential to save for the future, it’s also important to enjoy the present. Find a balance that allows you to enjoy life while also preparing for the future. Aim to save a portion of your income in a retirement account, such as a 401(k) or an IRA, and also set aside money for short-term goals, like vacations or a new gadget.

In conclusion, financial peace of mind comes from taking control of your finances rather than letting them control you. It requires a combination of good habits, such as tracking your spending, and strategic actions, like building an emergency fund and reducing debt. By giving every dollar a job and embracing your true expenses, you can smooth out the financial road ahead. Building your credit score and finding a healthy balance between saving and spending will empower you with the confidence that comes from financial well-being. Start taking these steps today, and watch how they can transform your financial life into one of tranquility and security.

Schedule a complimentary meeting with me to discuss your financial goals and chart a personalized course of action or a program for you toward financial peace. 

Start your journey towards financial peace today, armed with these unconventional hacks. March forward with confidence, knowing that financial freedom is within your grasp!