People always talk about being better with their money, but the bottom line is that there needs to be action to back it up. When it comes to finances, setting up a money plan is the first step to getting them in order once and for all. It goes further than simply creating a budget, although that’s a great place to start, as is using a budget calculator. It’s taking a deeper look into your current financial situation, your financial history and then, what you would like your financial future to look like.

How To Prioritize Your Finances

If you’re like most Americans, what you want to do and what you can do based on your current income are two different things and can be a struggle. However, before you allow yourself to get too overwhelmed, there are a few tips for putting your finances in order. Like with any lifestyle change, prioritizing your finances will take time, but once you have a basic plan in place, you can adjust it as needed without quitting it altogether.

First, plan a fund dedicated solely to emergencies.
Many people have that “emergency” credit card used for life’s unexpected surprises, such as car repairs, medical expenses, or a cushion for a particularly tight month of finances. I read a Chase Sapphire Preferred review that I liked, so that might be a suitable option. In addition to a credit card, it’s a good idea to also have savings stashed away for such expenses. Depending on your budget, save up at least $1,000 as your emergency savings to help combat those all-of-a-sudden costs.

How to implement: Cut back on dining out or monthly unused memberships or subscriptions and put this and any extra money towards your savings. You can also set up a certain amount from your paycheck to automatically be deposited into your savings every month, so you won’t miss it being gone.

Second, start tackling your debts.
Yes, it can be tricky to save and pay your debt at the same time, all while keeping to a budget, but it can be done. It requires discipline and consistency. Some people choose to pay off their debts with the highest interest rates first. Others decide to break their debts down from the smallest to highest amount and start with the lowest debt first. Whichever will make it easier for you to set up a plan and stick with it, choose that option and start slashing your debt.

How to implement: Make a spreadsheet listing all your debts, the amounts due, and the interest rates for each. Add a column for a due date for each debt to be paid off. Set automatic payments ahead of time that correlates with your chart and delete each debt as it’s paid off so you can visually see your financial wins.

Third, pay your taxes.
Paying taxes makes everyone groan, but they are a constant in life, so it’s best to pay in full and on time to avoid additional fees and notices from the IRS. If you’ve been feeling downtrodden by back-owed taxes, don’t ignore the problem. Explore your options. Programs like the IRS Fresh Start Initiative is a way to help people who are in debt and need a boost out. Professional tax relief services help individuals understand these types of benefits, and any downsides, and if they qualify for these types of programs.

Fourth, divide your “needs” from your “wants.”
Certain things like cable TV or a monthly magazine subscription may be so routine that they seem like “needs” when in reality, they are “wants.” List out every single monthly expense you have and put them in one of the two categories. A financial diet is similar to a health diet and you shouldn’t simply deprive yourself. Allow yourself a small splurge or two, but work it into your monthly budget, so you don’t get too far off track.

How to implement: Write down all your expenses and itemize them. Things like rent, electricity and groceries are needs. However, there are ways to cut costs even when it comes to necessities. Think about downgrading your living space. If you have a two-bedroom, but don’t actually need the extra space, rent a one-bedroom or studio instead. Plan a grocery list ahead of time to keep within your budget and to prevent any spontaneous purchases at the checkout line. When it comes to wants, cancel your monthly cable (this is usually between $30 and $100 per month!) and get something like a Google Chromecast.

With a one-time payment of about $30, it will save you a good amount in the long run. You’d be surprised how many extra costs add up over a month on things you don’t need or really even want at all.

You can take control of your money rather than feeling like it’s always controlling you. Prioritize your financial goals and make sure to check your progress (and any potential setbacks) week-to-week to ensure a successful plan.

What Have You Chosen To Cut Back On To Help With Your Financial Plan?