The Signs That Your Finances Aren’t As Bad As You Think

For anyone burdened with debt, fighting lifestyle creep, and overwhelmed by the current state of inflation, it’s all too easy to feel as if your finances are in disarray. You might be plagued with anxiety and assume that you’re “bad with money.” But when we live in a state of anxiety, we make worse financial decisions. In order to improve your relationship with money, it’s important to take stock of the things you’re doing right. Here are some examples of personal finance wins that you can celebrate whenever you need to build perspective and feel better about your financial health.

You have a budget

If you have a budget, you’re already more on top of your finances than most. Of course, having a budget and sticking to a budget are two different battles. Still, if you at least have one made, you’ve taken a crucial first step to be aware of how your finances stand.

If you don’t have a budget yet, maybe this is your sign to create one now. Again, this doesn’t have to be about making strict rules for yourself—it’s about understanding your spending habits and setting financial goals.

There are lots of different budgeting methods you can try to determine the best way to manage your money. A popular option to try out is the 50/20/30 method, but ultimately, the best budget is the one that works for you. Here’s our guide to getting your budget started.

You know exactly where your money is going

Even if you feel anxious about your spending habits, it’s important to know what those spending habits are. Being oblivious to where your money is going is a major red flag for your finances.

To be a more conscientious spender, start by looking at your bank statement for at least the last 90 days. After looking over your spending, you’ll likely discover areas where you can cut back on, as well as areas you didn’t even realize you were wasting money on (overlooked subscriptions come to mind).

You know the status of your debt

Similar to knowing where your money is going, it’s also crucial to know how much money you owe. You don’t want to live in fear and stay in the dark when it comes to your debt. Here’s our guide to getting organized enough to pay off your debt.

You have an emergency fund

A starter emergency or “rainy day” fund is around one month of rent plus your insurance deductible. If you have that amount saved away—and you don’t have to dip into it to pay routine bills—then you’ve taken an important step to carve out a more secure financial future for yourself.

Keep building your emergency fund to get to a point where it can cover you for six months or longer. If possible, stay on top of how much you’re saving and make sure it’s rising with your earnings.

Your relationship with money isn’t holding you back

If you’re constantly feeling buyer’s remorse, feel incapable of making decisions, and consistently lose sleep over money, something needs to change. When you feel confident that you’re spending only on things you love and not wasting money on things you don’t, you will make much better financial decisions for yourself.

Getting down on yourself for your money habits can backfire in the form of fear-based decision-making. It can help to zoom out and celebrate your personal finance strengths so you have the confidence to keep making smarter financial decisions down the line.