In the past two years, I’ve cut my spending by more than half. Despite working since I was 19, I didn’t start saving until my final semester of college. I didn’t understand budgeting or how credit cards worked. I ignored my mother’s advice and continued my bad shopping habits.

The Costly Mistake: Joining a Pyramid Scheme

My biggest financial loss came when I joined a pyramid scheme. I paid a large sum to join and another for training and materials. I completed the training. Then, I realized the setup was designed to help only those at the top. I quickly dropped out.

I mention this to highlight that there is no fast way to get rich. It doesn’t matter how much you wish for it. Even winning the lottery won’t fix poor financial habits.

Starting Over: Rebuilding My Financial Habits

When I reopened my savings account, I made a commitment to always deposit my tax return (if I received one). While living with my parents, I split my income: half went to savings, and the other half covered my debts. I had an advantage—no phone, rent, electric, or gas bills to worry about.

I also followed two tips a banker gave me when I opened my account at age 20. Always pay your credit card bills two days before they’re due. Also, always pay more than the least. Though these tips helped, they didn’t reduce my debt enough. I had to turn to debt consolidation for the second time this year. I found some great options using Credit Karma and Mint.

Tracking My Spending with Helpful Apps

I started using an app called Clarity, which calculates how much I’ve spent on services. It’s a great tool for tracking habits like ordering food too often on Seamless.

The 50/30/20 Rule: A Simple Guide to Better Finances

The 50/30/20 rule is a great way to control your finances. It divides your income into three categories:

• 50% goes towards bills and necessities.
• 30% is for things you want to buy.
• 20% goes into savings.

By adhering to this rule, you can avoid the embarrassment of borrowing money and improve your financial health.

My Guide to Getting Out of Debt

After my struggles and recoveries, here’s a simple guide to help you get out of debt:

1. How Much Money Are You Bringing In?

Start by calculating your total monthly income. Look at your bank account and add up all sources—work income, gifts, tax returns, etc. This gives you a clear picture of what you have to work with each month.

2. What Are Your Monthly Bills?

List your bills and their due dates. I keep an Excel sheet to track them, ordered by when I get paid. As the month progresses, I subtract payments from my bank balance. This ensures I always have money for bills. It helps me avoid late fees.

3. Can You Change Your Bill Due Dates?

If your accounts allow it, adjust your bill due dates to match your pay schedule. For example, if you’re paid bi-weekly, try to make sure your bills are due after each paycheck.

4. How Much Do You Need for Necessities?

Decide how much you spend on essentials like food, laundry, transportation, and medications. Knowing this helps you cut unnecessary spending and focus on what’s truly needed.

5. How Much Do You Have Left?

Pay for necessities and bills first. Put some money into savings. Allow yourself to spend a little on things you enjoy. Rewarding yourself helps keep you motivated.

Tackling Credit Card Debt

One of the biggest challenges is credit card debt. Here are two strategies to help manage it:

1. Open a Balance Transfer Card with No Interest

If you don’t already have many credit cards, a balance transfer card can be a good choice. You can transfer your existing debt to a card with 0% interest for a set period. This will reduce the interest you pay and lower your monthly payments.

2. Take Out a Loan to Pay Off Debt

Taking out a loan to pay off your credit cards can be helpful. You must follow one crucial rule. Always pay your loan balance in full every month. If you don’t, you’ll end up in debt again. Consider canceling some of your credit cards to avoid temptation.

Conclusion: Changing Your Habits for Financial Success

These tips have helped me regain control of my finances. What I want you to realize is this: Your income isn’t the issue—it’s your spending habits. By making smarter choices, you can live within your means and avoid falling into debt.

What are your tips for improving financial health? Share them in the comments below.