He compared this approach to making gradual dietary changes and exercise routine adjustments instead of radically overhauling it overnight. This can make the changes less overwhelming and more sustainable.
“What gets measured gets improved. You may find you’re spending a significant amount on things you don’t truly value.” Galici said. “This awareness can lead to eliminating unnecessary expenses and redirecting that money to debt repayment, savings or investments.”
Engage Consistent Budgeting
While budgeting is a common sense technique for good money management, like any habit you hope to change, consistency is key, according to Erika Rasure Ph.D., chief financial wellness advisor and client financial therapist at Beyond Finance .
“A budget is a tool, not a fix-all. It’s only helpful if you’re consistent with it, so find one that works for you,” she said.
She acknowledged that people can feel either scared of or restricted by a budget, but it’s helpful to shift your mindset to think of it more as a form of freedom.
“With a budget, you know exactly where every dollar is going. It creates a plan and empowers you to make saying ‘yes’ or ‘no’ easy. If a particular expense is not in the budget, it’s off the table,” Rasure said.
Build New Habits Slowly
Also, remember that building a new habit can take between 60 and 90 days, so don’t give up before you get there.
“Practice makes progress. I encourage everyone I work with to be open-minded and flexible regarding budgeting. It’s easy to let shame get in the way here,” Rasure said.
Cool Off Before Purchase
Impulse shopping is a common way of frittering away money. It’s easy to see something you think you want or need and leap on that purchase without much thought. Galicia recommended a “cool off” period for discretionary purchases of 24 to 48 hours.
“This doesn’t have to be extreme. You might apply this rule only to purchases over $50 or $100 depending on your unique situation. This pause can help you distinguish between wants and needs,” Galicia said.
Review Your Debt Rate
Galici believes in bringing greater awareness to any financial aspect you hope to change.
When it comes to debt, he suggested, “Calculate your debt rate by dividing your total debt payments by your gross income. If it’s above 30%, this could be the root of your financial stress rather than overspending.”
Tackle Your High-Interest Debt
It’s good to get out of debt generally, but according to Russell Rosario, CPA and co-founder of Profit Leap , it’s the high-interest debts that hold you back the most.
“Pay off high-interest debt aggressively. Make extra payments on credit cards and other debts charging over 10% interest. Once paid off, roll those payments into other financial goals,” Rosario said.
Additionally, refinance high-interest loans when rates drop.
“Lower interest rates on mortgages, auto loans, and other installment debts to put more money in your pocket each month,” Rosario said.
Choose a Debt Payment Method
If you don’t necessarily have super high-interest debt, you can choose one of several tried and true debt repayment processes, Galici said:
Debt Snowball : Order debts from smallest to largest, make minimum payments on all, but focus extra funds on the smallest debt. This method provides you with quick wins, which can be motivating.
Debt Avalanche: Order debts by highest to lowest interest rate, focusing extra payments on the highest-rate debt first. This approach minimizes the total interest you pay but may take longer to see progress.
For those with good credit, a debt consolidation loan might be worth exploring.
“This can simplify multiple debts into one fixed payment, often at a lower interest rate,” Galici said.
Just be aware that this can lower your credit score — but so can late payments or carrying too much debt, so it may be worth it.
Automate Finances
To make sure you’re saving and paying bills on time, Rosario urges automating your finances as much as possible. The more you can make financial habits automatic, the better off you’ll be.
“Set up autopay for essential bills, automatic savings contributions, and payroll deductions. Out of sight, out of mind.” Rosario said.
Galici added that this approach also takes away the need for utilizing willpower or constant decision-making.
If you struggle to make any of these steps on your own, consider seeking professional advice. Similarly, make one change at a time until each one sticks if you’re easily overwhelmed. With time and consistency, you can get your finances on track.
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