×

Title Here

Content Here

×

Title Here

Content Here

×

Title Here

Content Here

How much does money stress you out on a scale of 1-10? If you answered higher on that scale, you’re not alone. According to a new study by CNBC, 70 percent of Americans are stressed about their finances. However, you don’t have to stay there.

This blog will help you calm the chaos by covering how to get your financial life in order in 7 steps:

1. Create a plan to pay off consumer debt
2. Start an emergency fund
3. Get Insurance
4. Start a Housing Fund
5. Invest in Your Retirement (Long-term)
6. Invest to Create Passive Income (Short-term)
7. Build Your Credit Score

Bonus: Give Your Financial Stress to God

how to get your financial life in order

How to Get Your Financial Life in Order: 7 Steps for Success

1. Create a plan to pay off consumer debt

Few things will slow down your wealth building journey more than consumer debt. When you pay interest, you build someone else’s wealth and destroy your own. So, it’s vital to nip consumer debt in the bud immediately. 

 At WealthBuilders, we teach you the best way to get out of debt using something called the debt snowball. Here’s the process in a nutshell:

  1. Stop using every card but one. (Don’t close the accounts though, or your credit score will be negatively affected.)
  2. Pay off the card every month.
  3. Make the minimum payments on your debts.
  4. Make a list of your debts and write down how long it will take to pay each one of them off.
  5. Attack the debt that can be paid off the quickest first.
  6. Find your winning percentage (the extra room in your budget)
  7. Apply your winning percentage to the debt that can be paid off the quickest.
  8. Once that debt is paid off, apply the total monthly payment to the next debt.
  9. After every debt is paid off, invest your extra money. 

2. Start an Emergency Fund

If you want to build wealth that lasts, you can’t miss this step. Without an emergency fund, unexpected circumstances can wipe you out and erase your progress. Most experts recommend saving for 3-6 months of expenses in your emergency fund. 

3. Get Insurance

If you don’t have it already, insurance is a necessary financial safeguard. The cost of car accidents and medical emergencies can be astronomical without insurance. First of all, make sure that you have the basics– health, car, and home/renter’s insurance. After that, life and disability insurance are good ideas for how to get your financial life in order. If you’re under 50, health insurance is a lot cheaper, too.

 

How to get your financial life in order

4. Start a Housing Fund 

Buying a house is one of the first investments you should make. Everybody needs a place to live, and in most cases it’s better to make payments toward a place you own rather than cutting a check you’ll never see again. Your house can function like a bank. You can use the equity to purchase additional real estate or other investments. 

So, once you start to have extra room in your budget, saving for a down payment is an excellent goal. For more on how to buy your first home, download our free First Time Homebuyer Guide here.

5. Build Your Credit Score 

A good credit score (720+) is key to securing a personal home and low-interest rates on any capital you borrow. If you don’t have credit history, open a credit card as soon as possible and pay the balance each month. In addition, here are three ways you can build your score:

  1. Frequently Inspect Your Report: Scan your report regularly to ensure that all of the financial information is up to date and accurate. Most of the free reports don’t include the actual credit score. You can pay for a copy of your credit report and score from each of the following agencies: Experian, TransUnion, and Equifax.
  2. Check Open and Closed Accounts: Another important aspect to note on your report is the accuracy of your closed and open accounts. As many as 30% of reports incorrectly list closed accounts as open. This can negatively impact your credit score!
  3. Keep Your Credit Card Balances NO MORE than 50% of Available Credit: Know the limits that you have on your card and try not to touch them. Really, the best case scenario is to keep your balance no more than 33% of whatever your available credit is. So, if you have a $10K limit, it’s best not to owe more than $3,300 at any given time.

 

6. Invest in Your Retirement (Long-term)

Use the extra room in your budget to get some long-term investment strategies in place. A Roth IRA is a great place to start because it’s a  tax-deferred account, meaning that you don’t have to pay taxes on withdrawals. If your employer matches your 401k contributions, you should take advantage of that, too. Finally, opening a brokerage account and holding the assets until you retire is another good long-term strategy.

 

7. Invest in Your Retirement (Short-term)

If you want to build wealth that lasts, you need a short-term investing strategy as well. The goal is to invest in some assets that pay you monthly, quarterly, or annually. This could include rent from real estate, dividend paying stocks, or  profits from a business, for example. A good short-term investing strategy includes assets that you don’t have to sell to make money.

 

Bonus: Give Your Financial Stress to God

“So don’t worry about these things, saying, ‘What will we eat? What will we drink? What will we wear?’ These things dominate the thoughts of unbelievers, but your heavenly Father already knows all your needs.” (Matthew 6:31-32, NLT) 

Jesus offers us the ultimate solution to financial stress– trust. When we trust that God is our Provider and surrender our need for control, powerful things happen. Now, faith is no excuse for poor financial stewardship. In fact, as we grow to trust God more and invite Him into our money matters, our financial stewardship actually improves! 

If you struggle with financial stress, generosity is a gateway to freedom.

It seems backward, but the wisdom of Heaven is often different from the wisdom of the world (1 Corinthians 1:20). For Christians, tithing 10% of your income to the local church and giving offerings is a vital step for how to get your financial life in order. The Bible says that when you give, you receive. (Luke 6:38) But there’s another layer there, too. When you give, you oppose the spiritual forces that want to keep you enslaved to money. Stress and control begin to melt away as you use your money to partner with God’s mission in the world.