It’s a new year, and many people use this time to make fresh goals for their lives. Many of those goals center on improving their personal finances; some might decide this is the year they get serious about paying off their debt, raise their credit score, or otherwise improve their situation. This article will explain why people struggle with their finances—and provide some solutions.

Why Do People Struggle with Their Personal Finances?

There is a long list of reasons why people have a poor financial situation, and not all of them can be controlled. Thankfully, some of them can be controlled or mitigated—if you recognize them.

Spending Too Much of Your Income on Housing

There’s a rule of thumb that says you should never spend more than 30% of your gross monthly income on your rent or mortgage payment. If you’re making $3,000 each month before taxes, for instance, then you shouldn’t be paying more than $1,000 per month on housing. Going higher than that could spell financial trouble, putting you into a cycle where you barely scrape together your rent or mortgage payment each month.

Your Monthly Income Fluctuates

More than 40% of Americans say they struggle to stay on top of their bills, and one reason for that is fluctuating monthly income. If you’re used to working a set amount of overtime, for instance, you might get used to that additional income and expand your standard of living to include it. When overtime gets cut, you’ll feel the pinch. This also happens to workers who see their hours cut, bonuses or incentive programs ended, or sales drop.

Impulsive Spending

If you’re someone who always upgrades their smartphone whenever the new model comes out, or needs to stay on top of fashion trends, video games, and other things, you might be hurting your financial health. Always needing the latest thing is expensive; there’s always something new, and if you’re chasing those trends, you’re throwing money away.

Being Too Intimidated to Ask Questions About Money

Many people are embarrassed by their lack of financial knowledge, and so they don’t want to ask the questions they need answers to. Not getting those answers, however, means not having the knowledge necessary to handle finances in a smart way. That leads to poor decision making and a resulting poor financial situation.

How to Improve Your Financial Situation

There are several things you can do to help yourself and your finances. They might seem like work—and it might require some changes in financial priorities—but you’ll be grateful you did them once you see how much money you’ll save.

Set Up a Budget

Understanding where your money is going and how much you’re spending is a critical first step to handling your money in a more efficient and intelligent way. With a budget, you can plan for unexpected expenses like car repairs or illness and can help inform your buying choices. If you understand your financial obligations each month, you might be less inclined to make that impulsive purchase.

Have a Savings Plan

Things happen. Cars break down, you or a family member might get sick, you might have a pipe burst or appliance break. If you’re living paycheck to paycheck, one of these events could send you into a downward financial spiral. It’s imperative that you have a savings plan to handle these little emergencies, and your budget can help you save for them. If you have money set aside, when something happens it won’t break your wallet—you’ll have the money to handle it.

If you happen to get some extra money over and above your budget, such as an incentive payment, inheritance, or other cash, plan to set it aside in your savings plan. You’ll be glad you did.

Use Personal Finance Software

In today’s tech-infused world, gone are the days when you wait until the end of the month to balance your checkbook with a calculator and bank statement. With online banking and personal finance tools, you can have a real-time understanding of where your money is, how much you have, and where it’s going.

There are many different types of personal finance software that can help you manage your finances, keep you on track with your financial goals, plot out your savings plan, and remind you when bills need to be paid. Mint, for example, is one of the most popular apps for personal finance. It tracks bills, savings, assets, debt, and helps you understand the big picture of your net worth—and how to increase it.

Acorns is another financial app that takes the spare change from your debit card purchases and invests it in the market. For a few cents per day, you can start investing your money and growing that nest egg without even missing the money you’re contributing.

You don’t have to be struggling financially. With the tools available, some smart goals, and a little self-discipline, you could find 2019 is the year you take back control of your finances.

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