Managing personal finances is a huge issue for lots of people. In fact, it can often be one of the biggest contributing factors to stress in a relationship and has caused fractures in more families than you might realize. Unfortunately, financial management, budgeting, saving, and investment are not commonly taught at schools, and unless our parents instill these skills in us from a young age, we usually end up learning by making mistakes. If you are someone who has struggled with money in the past but are determined to create a brighter future for your family, these six steps will set you on the right track.

  • Rebuild your credit

If you have had money troubles in the past and it has affected your credit, it can feel like you’re facing an uphill struggle. However, it is absolutely possible to repair bad credit, and there are plenty of banks, credit cards and lenders which will give you the opportunity to prove yourself and rebuild your credit. It won’t happen overnight, but you can turn your credit around. To get started, take a look at the top 3 second chance checking accounts of 2019.

  • Work out your monthly budget

Effective money management begins with monthly budgeting. By working out exactly how much money you have coming in and exactly how much you need to pay out (and when), you can ensure that you are meeting all of your financial obligations. You will then have accurate visibility of the money you have for saving, investing and/or treating the family so you can do so without worry. Budgeting is essential if you are working towards a financial goal, such as saving for a deposit for a home, repaying debts, saving for the future or any other goal. You could also work out an annual budget if your goal is a long term one.

  • Pay off your debts

Paying off your debts is essential when trying to work towards a stable financial future. This is particularly important if you have high interest rates on your borrowed money as it does not make sense to save or invest while your debts are increasing. Being in debt can be incredibly stressful, and you may feel like there is no way out, but there is light at the end of the tunnel. Cutting your expenditure and, if possible, increasing your earnings will help to speed up the process, but it takes a lot of planning and self-discipline. When you have repaid your debts, it’s crucial to avoid running up debts again which is where saving is vital. If you can save each month, you can build up a fund for big purchases like cars or medical expenses, so you don’t have to turn to loans and credit cards.

  • Keep an emergency fund

Ideally, when your debts are paid, you should try to save up enough money that you would be able to cover around 6 months of your expenses and financial commitments. This means that if you become unwell and unable to work, you lose your job or life throws you any other type of curve-ball, you have a buffer you can turn to. This is often referred to as an emergency fund which means you don’t need to dip into your retirement savings or investments if you fall on hard times. This is particularly important if you have an unstable job such as being self-employed. To start, aim to save around a month of expenses or a month of income.

  • Start saving

Now you have put yourself in a more stable position and protected yourself financially from the unexpected; you can start saving for your family’s future. This means saving for a down payment for a home, your retirement and/or college funds for your children. Generally, financial experts advise saving around 15% of your annual income each year for your retirement, but you should save more if you can. You may need to speak to a financial adviser who can work out how much you should be saving to give you a comfortable retirement. Your 401(k) can be part of your retirement plan, but you might also want to consider investing your money.

  • Consider investing your money

If you do decide to invest your money, you may want to consider diversifying your investments as much as you can. You could choose annuities, real estate, mutual funds or other types of investments, but it’s often best not to place all your money in one place. You may also want a balance between safe and riskier investments. When done well, investments can be very lucrative and can significantly increase your retirement funds. However, as you near your retirement, you may want to move your money to more stable investments which will not fluctuate with the market too much.