Feeling Behind on Your Finances? Here’s How to Get Back on Track

It’s normal to feel overwhelmed when it seems like your financial goals are slipping further away. It’s normal to some make poor choices or have slip ups in financial responsibility from time to time. It’s normal to feel that, at a certain age, you should be more established. The most important step is recognizing there’s a problem and committing to making changes. If you’re feeling behind, don’t worry, you have time to turn things around. Here’s how to get back on the right path.

Acknowledge and Asses Your Situation

Don’t hide from the problem, don’t shrug it off or try to avoid it. Recognize this is an issue and face it head on. The fact that you’re worried about your finances shows awareness, and that’s a big step forward. Many people don’t pay attention to financial red flags until it’s much later in life. Understanding your spending habits, debts, and savings puts you in a position to take control and make meaningful changes.

Take a close look at your income, expenses, debts, and savings. This can be an eye-opening exercise and help you identify areas where you’re overspending. Use a simple Google Sheet to track your daily, weekly, monthly spending. Perhaps lifestyle choices like dining out, shopping, or entertainment have been more costly than expected. Once you know where your money is going, you can start making changes. Figure out where you can cut down, can you go to less expensive restaurants, grocery stores, etc… Can you get on a family plan for subscriptions like Netflix or Spotify? Often times even 2 people splitting a family plan is less expensive than a single person on a single account- same for phone bills. The companies don’t need to know you’re “not really family”

Reframe Your Identity, Not Just Your Goals

In his bestselling book Atomic Habits, James Clear makes the point: real, lasting change doesn’t come from setting goals, it comes from changing your identity.

Instead of saying “I want to lose weight,” Clear suggests saying, “I’m a healthy person.” The shift seems small, but it makes a huge difference. Goals are outcomes. Identities are who you are. When your actions flow from identity, they’re far more likely to stick. The same idea applies to getting your finances back on track.

Instead of saying:

• “I need to stop overspending.”
• “I want to get out of debt.”
• “I should start saving.”

Try reframing your thinking as:

• “I’m someone who makes smart financial decisions.”
• “I’m a person who lives within their means.”
• “I’m someone who builds wealth for the long term.”

An identity based approach helps you act in alignment with the person you want to become, not just the outcomes you hope to achieve. It’s easier to skip an impulse purchase when you see yourself as someone who’s disciplined with money. It’s easier to check your accounts regularly when you believe you’re someone who’s on top of their finances.

Behavior change becomes less about willpower and more about casting votes for your new identity, one smart money decision at a time.

Build a Budget That Works for You

Creating a budget is a foundational step. List all your necessary expenses, such as housing, utilities, insurance, and debt payments. Then allocate a reasonable amount for discretionary spending, but be sure to limit it. Budgeting isn’t about depriving yourself; it’s about prioritizing and making sure you’re living within your means while working toward your financial goals. Budgeting apps like Mint, YNAB, or Monarch can simplify this process and help you track your spending. The right hourly financial planner can also pay for itself exponentially.

Develop a Debt Repayment Plan

High-interest debt can be a major roadblock to financial stability. There are two common strategies to consider:

Debt Avalanche: Focus on paying off debts with the highest interest rates first. This will save you money on interest over time.

Debt Snowball: Start with the smallest debts and pay them off first to gain a psychological boost and build momentum.

Choose the method that motivates you the most and stick to it. If you have loans with high monthly payments, think about options like refinancing or restructuring to make them more manageable.

Reevaluate Big Expenses

If you have large monthly expenses, such as a car loan, consider if it makes sense to downsize or refinance. A less expensive or more efficient vehicle could free up significant money for debt repayment or savings. Evaluate other large expenses as well, like rent or subscriptions, to see if there are areas to cut back. Can you bike to work instead of going to the gym? That’s killing two birds with one stone.

Build a Modest Emergency Fund

While focusing on debt repayment, it’s essential to have a small emergency fund to cover unexpected expenses. This fund can prevent you from taking on more debt if an emergency arises. Start with a few hundred dollars, then aim for $1,000 dollars, then one month, then you can think about getting to three or six months’ worth of essential expenses, take it slow, small wins build up.

Focus on Small Wins and Stay Consistent

Making big financial changes can be stressful, so celebrate small victories along the way. If you’re able to pay off a credit card or save a month’s worth of expenses, take a moment to feel proud of your progress. Staying consistent and disciplined is key, but allow yourself a bit of grace if you slip up. The important thing is to get back on track.

Take Care of Your Mental Health

Financial stress can take a toll on your mental health. Make time for activities that reduce stress, like exercising, meditating, or spending time with loved ones. If anxiety becomes overwhelming, consider talking to a financial coach or therapist who can provide support and guidance.

Remember, It’s Never Too Late

Many people find themselves in tough financial situations in their 30s, 40s, or beyond. The important thing is to start now. You’re learning valuable financial lessons that will serve you well in the future. With discipline and a solid plan, you’ll be able to build a stable financial foundation.

Feeling behind on your finances can be scary, but it’s not a permanent situation. By taking small, consistent steps, you can make significant progress over time. Be kind to yourself, stay focused, and know that your financial success story is still unfolding. You’ve got this.