Tax season can be an eye opener in recovery.
Many realize that they actually made some real money in the last year and yet have nothing to show for it. Others realize that they didn’t make much money at all and that they are drowning financially as a result. No matter which one of these situations describes you, one thing is clear: In order to lower stress in recovery, it is essential to get a solid grip on your finances and put your money to work for you.
Here are a few tips to help you get started pointing your finances in the right in the direction:
1. Create a budget. Find a free budget sheet online that best suits your situation and fill in the blanks, or create your own in a notebook or in an Excel spreadsheet. If you know the exact amount of a regular bill, write that number, but if it tends to fluctuate from month to month, write an estimated number. For example, you know what your rent will cost every month so you can note that exactly, but your power bill could be anywhere from $50 to $75, write down $75.
2. Note actual expenses. During the first month, keep track of everything you spend down to the dollar. If you estimated that your food costs would amount to $500, write down every time you spend any amount at the grocery store, stop for fast food, or buy a drink from a vending machine. You need to know exactly where your money is going and if your estimates are accurate. If they are not, make adjustments to your budget accordingly.
3. Write down all sources of income. If you have a job, of course this will be your main income, but if you mow lawns on the side or sell things on LetGo or Craigslist, take note of this as well. Just as you will need to have a good idea of all the ways you are spending your money, you also need to know how much you have every month.
4. Make a list of all your debts. Whether you owe someone $20 for buying you coffee for a week, are still paying off your time in drug rehab, or owe a roommate for covering your rent when you were out of work or in rehab, write it all down. Know your expenses, know your income, and know what you need to pay off to get back on solid financial ground.
5. Do the math. When you subtract your expenses from what you make, do you have anything left over? If so, your goal is to start paying off the debt that creates bills for you every month. Start with the smallest debt that you pay for monthly and put all your leftover money toward getting it to zero in the coming months. When the first one is paid off, take the amount you were paying on that bill plus your extra and put it toward the next smallest bill.
6. Make some cuts. If you feel like this plan will take too long or if you do not have any “extra” at the end of the month, it’s time to take a good look at your budget and make some cuts. What expenses can be dropped for a few months while you work to pay off debt? Can you make lunches at home rather than eat out or make coffee at home versus going to Starbucks? Consider what you can do without so you can get ahead.
7. Consider a side gig. If you are not making enough money to make any real progress – or any progress at all – it may help to work a little more on the side. Take on extra hours if they are available or offer to help out at a friend’s business. Painting, landscaping, cleaning, and other jobs are often available on a per-job basis and make it easy for you to earn what you need to work toward your financial goals.
8. Keep yourself accountable. Having cash or “extra” money may be a trigger for relapse, especially if you are not used to having money in your pocket. It can help to have someone you trust hold you accountable for how you spend your money.
9. Find a community of support. Your friends in recovery may also be working to get their financial goals in line, but you may need to look for outside support groups to assist you in managing the questions and issues that come up when it comes to getting your money on track, especially if you intend to work hard and be focused on attaining your financial goals beyond simply paying the bills. Both online and off, there are a number of groups that will be able to provide you with tips, support, and information about how best to keep your money working for you in recovery, including 12-Step-based groups like Debtors Anonymous.
10. Saving for your future. As you get your debt paid off and your expenses under control, you can make plans for how you would like to save your money. Though it is good to have an emergency fund in the bank, given your recovery status, it may make better sense to invest in vehicles that are more difficult to liquidate – a good problem to have with an array of professionals more than willing to assist you.
How are you working to get your finances on track in recovery?