5 Steps to Rebuild Your Finances

How to bounce back after taking a financial hit.

The Thrive Global Community welcomes voices from many spheres on our open platform. We publish pieces as written by outside contributors with a wide range of opinions, which don’t necessarily reflect our own. Community stories are not commissioned by our editorial team and must meet our guidelines prior to being published.

If you find yourself barely able to make ends meet, or are struggling with mounting debt, you may be wondering if it’s possible to turn your financial situation around. It may take some time, depending on the seriousness of your situation, but don’t be discouraged. The pandemic has certainly contributed to the financial stress of millions of people, but it’s still possible for you to make significant improvements by consistently taking a few small steps.


The first step is to assess your current finances. Before you can determine your specific goals for the future, you’ll first need to take an honest look at where you are in the present. This will show you what changes, if any, that need to be made so you can create a plan that will move you to where you want to be. 

A good place to start is determining your net worth. Begin by writing down all of your assets, including stocks, bank accounts, real estate, retirement accounts, and mutual funds. Keep in mind that your vehicle and house don’t count unless you plan to sell them. Next, list all of your liabilities, including credit card debts, and loans.

Subtract your liabilities from your assets and you’ll have a pretty good idea of your current net worth. Hopefully it’s positive, but if not don’t despair. This information is what you need so you can formulate an effective plan to change things.

Where’s Your Money Going?

The next step is to evaluate exactly where your money is going. You can start by categorizing your spending for the last thirty days. This activity is invaluable and often reveals areas where you’re spending much more than you thought. After you see where your money is going, you can pinpoint areas that are nonessential and make necessary cutbacks. It may seem tough at first, but remember it’s only temporary until you can get back on track.

Reduce Wherever Possible

Any reductions you can make in your monthly expenses will benefit you in a big way. If your rent is high, perhaps you can find a less expensive place to rent or get a roommate to help offset the cost. Shop wisely and purchase only what you really need. Again, this isn’t about taking all the fun out of you life, it’s about rebuilding your financial stability as quickly as possible.

Look for ways to reduce utility bills, use coupons, and make coffee at home. These may seem like small things, but these small things can add up to big money over the span of a few weeks. If you have a mortgage, look into refinancing your loan if current interest rates are lower than the one you have. 

Slay Debt

Reducing or eliminating debt remains one of the fastest ways to financial freedom. The first thing you want to do is not acquire any new debt. Next, assess the debts you do have and create a plan to pay them down as fast as you can.

If you find you’re struggling, you might consider contacting a nonprofit credit counseling agency that can help you make a debt management plan to pay off your debt. Please be careful not to confuse a debt management plan with a debt settlement plan. A good agency will help you create a plan to pay down your debt, and get your monthly payment and interest rates lowered without damaging your credit score.


Once you’ve established your current financial status, identified where your money is going, reduced as many expenses as possible, and have nailed down a plan to slay your debt, you’re ready to make some solid goals. This is your vision of how you want your life to look and the lifestyle you desire to live. Without specific goals, it’ll be impossible to make a plan.

When making goals, divide them into two categories: Long-term, and short-term. Long-term goals help keep you on track, while short-term goals keep you motivated. For example, a long-term goal may be saving money in order to change your living situation. Short term goals can help you get there by what items or expenditures are affordable or necessary right now

Rebuilding your finances may seem overwhelming right now. But by taking intentional steps, and doing so consistently, you will improve your situation significantly. The key to being successful is staying motivated throughout the process. Share your goals with trusted friend and family members to keep yourself accountable. Break everything down into smaller steps, and celebrate major victories by rewarding yourself. With a little patience and a lot of commitment, you will build the life you’ve been dreaming about.

    Share your comments below. Please read our commenting guidelines before posting. If you have a concern about a comment, report it here.

    You might also like...


    Financial To-Do’s Before Saying “I Do”

    by Brittany Yoon

    The Stress Of Being Financially Stable

    by Nitin Saxena

    Michelle Smith Source Financial Advisors: 4 Tips for Undoing Your Financial Fog.

    by Michelle Smith.

    Sign up for the Thrive Global newsletter

    Will be used in accordance with our privacy policy.

    Thrive Global
    People look for retreats for themselves, in the country, by the coast, or in the hills . . . There is nowhere that a person can find a more peaceful and trouble-free retreat than in his own mind. . . . So constantly give yourself this retreat, and renew yourself.


    We use cookies on our site to give you the best experience possible. By continuing to browse the site, you agree to this use. For more information on how we use cookies, see our Privacy Policy.