Oops! Looks like you’ve accidentally stumbled into a deep, dark financial hole. That’s not a fun place to be—very dirty down there with lots of bugs and mud. You might have wound up down here for a variety of reasons; maybe you had a huge expense that threw your finances into chaos; maybe you got laid-off from your job; perhaps you maxed out your credit card. Whatever the case, you’re here.

Getting your finances in order might seem like a daunting task. But with the right financial plan and a little discipline, you can climb out of any financial hole that you’ve dug for yourself—and you can do it in 5 easy steps.

1. Create a Budget

There’s no doubt about it: creating a budget is the first and arguably the most important step in fixing your finances. Chances are, you’re in a financial hole because you didn’t adhere to a good budget. Don’t feel bad about it—budgeting is truly one of the hardest things to master, especially with all the expenses we have in our daily lives.

When you’re budgeting, you should keep in mind the two basic human needs: food and shelter. Above all else, you should have money allocated to pay your rent and buy food. Remember that you can save a lot of money by choosing to prepare meals at home.

You should obviously set aside some money to pay your bills and to pay down your debt. And don’t forget to set aside money for savings—you can still save money when you’re living paycheck to paycheck.

2. Handle Your Tax Situation

Taxes can put your finances in a bind like no other. If you’re late paying your taxes, then you could be subject to big IRS penalty fees. And if your backed taxes continue to add up, then the IRS could impose worse penalties, like tax liens, wage garnishment, and even property seizure. A lot of people avoid dealing with their back taxes because they get too stressed out about it—and, of course, procrastinating on filing your back taxes only makes the situation worse.

If you owe tax money to the IRS, prioritize those payments over other kinds of debt, and schedule an appointment with your IRS office to discuss setting up a payment plan that works better for your budget. And don’t hesitate to get help filing back taxes—tax professionals know exactly what you need to do to get caught up on your tax filing.

3. Don’t Climb Too Fast

If you have lots of loans that you’re paying off, like student loans, an auto loan, or a high credit card bill, then you might feel tempted to spend a huge portion of each paycheck on paying down your debt. Getting out of debt is important and you’ll be able to keep a lot more money in your pocket when you’re debt. But you should avoid overpaying on installment loans, which is a big financial mistake and is also one of the most common millennial mistakes—millennials are more greatly burdened by debt and often desperate to get out of it.

If you pay too much toward your debt, then you might not have enough money leftover to contribute to savings. You also might not have enough money for spending, and while it’s great to be debt-free, it’s also great to enjoy life and to be able to go out and do things that make you happy, whether it’s going to a concert or indulging in some retail therapy, just be sure to consider how your spending falls into your budget. Even when you’re in a financial hole, you shouldn’t necessarily prioritize debt over your checking and savings accounts. Balance is key.

4. Be Frugal

Although you shouldn’t be afraid to spend money on “fun stuff” here and there, you should still practice frugality when money is tight. After you’ve created your budget, set aside a small amount of money for spending, and decide what event/items to want to spend it on. Outside of those predetermined expenses, avoid spending money on needless things.

As mentioned earlier, remember that your most important budgeting items are for rent and food. You can’t do much about your rent cost, but you can save money on food by not eating out. Take quick showers and turn your lights off when you’re not using them so you can cut down your utilities bill.

5. Change Your Lifestyle

Last, but definitely not least, it’s important for you to change your spending habits so you won’t end up in another financial hole down the road. Do you spend too much money eating out or buying things? Create a tighter spending budget and stick to it. Was there an unexpected expense that hurt your finances? Increase your savings contributions and start an emergency fund. Steady spending and saving is the best way to keep your bank accounts in good shape.

Use these 5 tips to help you regain your financial freedom!

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