1. Establish What Matters Most to You

When it comes to finances, you want to ensure stability without compromising your values. Establishing your priorities is a great way to do this. Sit down and make a list of what matters most to you that you aren't willing to cut back on. At the same time, evaluate things in your life that you might be willing to do without if needed. For example, if you know that spending family time outdoors is important, then learning how to finance a pool is a great way to make that a reality within your budget. 

2. Break Down Current Income and Expense Numbers

A budget is crucial to keeping your finances on track. Unfortunately, many young people never learn how to build one, leaving them woefully unprepared for the financial responsibilities of adulthood. While there is a lot that goes into building a budget, the first step is to get a realistic picture of your total income and all expenses. 

You will need to track all spending over the course of at least a couple of weeks, plus go back and find any bills that are paid on a quarterly or annual basis, to establish a true picture of where your money goes. Armed with this information, you can set up a budget that meets all expenses and still leaves room for rainy days and emergency funds.  

3. Learn How To Use the Debt Snowball

If you are trying to manage finances with the aim of getting out of debt, this section is for you. The debt snowball is one of two very popular debt repayment strategies that people have used to get their finances under control. In it, you will pay minimum amounts due on all accounts except the one with the smallest balance. That one gets all the extra money you can throw at it until it is paid off. Then you can move to the next smallest account. This strategy gives positive feedback, so you are encouraged to keep paying down your balances. 

For people who do not need to see every small step in their progress, you might consider the snowball's less costly cousin: the debt avalanche. This focuses on the highest interest rate first to reduce the total cost of repayment regardless of each balance.

4. Be Honest About How Much You Can Cut Back

This is a very common mistake people make when setting financial goals. It is also why it is so important to get a realistic picture of what you spend when building your budget. You must leave enough room for price increases and an occasional unforeseen expense, or risk derailing your financial plan. 

For example, if your goal is to buy a new car, you will either need to save the purchase price or find an auto loan. Either way, you will need to set aside a certain amount of money each month. If it will take $500 per month to pay for your car, then a transportation budget of $400 isn't very realistic. In this example, you also have to look at the total costs of ownership with maintenance, insurance, and fuel. 

5. Get SMART With Goal Setting Strategies

Finally, it is very helpful to learn about SMART goals. These can be used in any situation, but they are especially useful when it comes to major changes. Every SMART goal shares the following set of characteristics. They are:

• Specific

• Measurable in a concrete way

• Attainable

• Relevant to your larger goal

• Time-bound

Burying your head in the sand will not move you any closer to financial goals. Instead, use strategies like establishing priorities, being realistic about spending, and setting SMART goals to make your dreams a reality. 

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