Step 1 of Financial recovery: Evaluate Your Current Financial Situation

Step 1: Evaluate Your Current Financial Situation

Assess Your Current Financial Situation

Before you can effectively evaluate your current financial situation, you must first accept your financial situation. This may be easier said than done, especially if you are dealing with the emotional aspects of losing a job, your retirement savings, investments, a partner, or your health and ability to work.

 

You must also accept that you may need to change your financial lifestyle and sacrifice certain items for a period of time in order to meet your goals and recover financially. There is no doubt that changing your financial lifestyle will be challenging, though necessary.

 

You might also be experiencing financial difficulties related to an abusive relationship.  If you need help evaluating how domestic violence has affected your financial situation, consider talking to a local domestic violence service program.  For more information, visit www.womenshealth.gov/violence.

 

Once you are able to assess your current financial situation, examine your income and expenses including your debts. Some questions to ask yourself:

  • How much income do I have each month?
  • When do I receive that income?
  • How do I currently prioritize and spend the money I receive?
  • How much am I overspending each month?

 

How many of you know (for the most part) where your money goes each month or even each day? If you do not know where your money goes, track your spending so you can examine your income and expenses.

 

There are a number of ways you can track your spending, so pick a method (or methods) that work best for you. For instance:

  • Use your monthly checking account statements and/or check register to track your spending.
  • Use money management software to track your income and expenses.
  • Ask for and save receipts if you use cash regularly. Add the receipts on a daily or weekly basis so you are not overwhelmed with this task at the end of each month.
  • Consider writing down your cash expenses on a regular basis if you do not always collect receipts. This will help you remember how you spent your money at the end of the month.