How you can stop financially surviving and start thriving

More than 50 percent of Americans are living paycheck to paycheck according to BankRate‡. It can be daunting and overwhelming to think of how you can improve your financial picture, but with a few small tweaks, you can move from financially surviving to thriving.

Get back to the basics

The first step in changing your financial picture is to always create a budget. Knowing what money is coming in and what money is going out. According to NerdWallet‡, 73% of Americans have a monthly budget. As you start your budget, take guilt and shame out of your vocabulary. There is nothing wrong with spending money eating out, or on an expensive hobby. But in order to adjust your spending, you have to know the reality.

Your budget should be structured in a way that can be easily understood. You want to create a budget that works for you. For some, this could be creating a budget in an app while others are going to prefer pen and paper. Neither option is better than the other, but you want to pick a method that will prompt revisiting. In order to get control of your finances and enter a state of thriving, you have to understand it all first.

A budget is not a resistive list of "cannot." It is an order sheet telling your money where to go, instead of wondering at the end of the month, "where did my money go?"

Set a goal

After you've established your budget, it is time to prioritize your spending so you can thrive. For some that might look like being able to go on vacation or purchasing a home or it could be paying off credit card debt. In order to thrive financially, you first need to know where you want to go and how to get there. And while the cost of living continues to rise and financial obligations such as student loans or childcare costs can seem daunting, it is important to remember a little win can help you reach a big goal.

In order to reach the little wins, you have to get started. Think of your finances almost like an exercise plan or a healthy eating lifestyle. Your finances are the ultimate form of self-discipline and determination and your prize at the end is the goal you have set for yourself.

One of the first steps here is to create a savings plan. How much you will be able to save depends on your budget, which is again, why it is vital that you start with an honest budget. There are different saving accounts that you can use to help you reach your goal such as a time deposit or money market account, high-yield savings account and an investment account. Each account has different terms and conditions so talk to a banker to see which ones makes the sense for your specific goal.

As you set your goal, you want to establish goals that are attainable for you to reach. Maybe instead of paying off every ounce of debt you have, you start with the smallest amount. Or instead of affording a week-long vacation overseas, you earn a weekend road trip with your friends.

Debt management: strategies for taking control

Along with setting a realistic goal, you also must be realistic about your debt and identify which strategies can work best for you. If your goal is to pay off debt, the first step is to understand it. Some debt, for instance a mortgage, can be healthy debt. While other debt, like credit cards, could be something you want to pay off quickly if you are incurring more costs because of a high interest rate. Similar to your budget, the first step to tackling your debt it to write it all down. Once again, remember to take the emotion out of it. It is ok that you accumulated credit card debt, but now create a plan to live debt free if this is your goal.

There are a few different methods to pay off debt such as the avalanche or snowball method.

With the avalanche debt strategy, you pay the minimum due on all your bills, and pay as much as you can on the balance with the highest interest rate.

Once the balance with the highest interest rate is paid off, start paying more on the next highest interest rate debt.

The snowball debt payoff strategy starts with paying the minimum amount on all your bills, as well as paying as much as you can toward the smallest debt balance each month.

Once the smallest balance is paid off, repeat the process with the next smallest debt balance. Remember, it can take time to get out of debt, but every dollar put towards debt helps you thrive in the long run.

Staying motivated

The cost of living continues to rise, so it can be hard to stay motivated while just trying to pay the bills. As you live within your means through your newly created budget, look for opportunities to celebrate every achievement. Being able to save for retirement or invest in the stock market is a big deal! It can also help to share your financial goals with your friends and family. Others might be able to support you in your goals to save money for a financial goal if they know about it.

You can also stay motivated by looking for opportunities to make money. Look for small wins first. Maybe your company has a fitness reimbursement you can apply for or a credit you can earn to save on health insurance. Or there could be an opportunity to pick up some additional hours or overtime work. Nearly 8.4 million Americans have a second job according to the Labor Department‡. If a second job doesn't work for your personal circumstances, you might want to consider selling items online, or looking for small things you can do like dog walking or helping a neighbor with yard work in order to earn a little extra money.

Ultimately, financially thriving starts with living within your budget and creating a plan to get out of debt. Then, you can establish a financial goal that helps you achieve your dreams. Your bank is available to create a path forward that works best for your personal circumstances.

UMB personal banking solutions offer convenience and simplicity to meet all your financial needs. From home loans to auto financing and everything in between, see how UMB personal banking can work with you to find the right products for your life and lifestyle.

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