The 1st Step to Gaining Financial Security

We all dream of financial freedom. If your financial goals seem hard to accomplish, you may need to take this one important step: acknowledging them. Just like in a 12-step recovery program, the first and most crucial step is admitting that there’s a problem. Whether you’re drowning in debt, struggling to save, or constantly worrying about money, you can’t move forward without facing your financial reality head-on.

Many people avoid thinking about their financial issues because it’s uncomfortable, stressful, or overwhelming. They ignore bank statements, avoid discussing money with their partners, and continue spending beyond their means. But financial security isn’t built on avoidance—it’s built on awareness and action. The good news is that once you acknowledge the problem, you can start making incremental changes that lead to true financial freedom.

Facing the Truth: Acknowledging Your Financial Problems

Taking an honest look at your financial situation can be intimidating, especially if you’ve been avoiding your bank account or credit card statements for months (or even years). However, the sooner you confront your financial reality, the sooner you can start making progress.

How to Acknowledge Your Financial Problems

1. Assess Your Debt – Make a list of all your debts, including credit cards, student loans, personal loans, and any other outstanding balances. Write down the total amount owed, the minimum payments, and interest rates.

2. Track Your Expenses – For at least a month, track every dollar you spend. This will help you identify spending patterns and unnecessary expenses that might be holding you back.

3. Review Your Income – Look at your total monthly income from all sources. Compare this to your expenses to see if you’re living within your means or constantly coming up short.

4. Acknowledge Your Financial Habits – Be honest about your spending habits. Are you an emotional spender? Do you buy things you can’t afford? Are there certain situations that are leading to overspending, like going out with friends or visiting certain stores? Are you avoiding saving because you feel like you’ll never have enough?

By taking these steps, you’re acknowledging your financial reality and setting the stage for meaningful change.

Small Steps to Take After Acknowledging the Problem

Once you’ve accepted that your financial situation needs improvement, the next step is to take action—one step at a time. Financial freedom isn’t achieved overnight, but small, consistent actions will lead you there.

1. Create a Budget That Works for You

A budget isn’t about restricting yourself—it’s about giving yourself control over your money. Your money is a tool and you can wield it for your benefit. When you set parameters for yourself, you can choose where to spend the money you make. Do you want to blow it all on eating out? Or would you like to funnel some of that into your retirement?

2. Start Paying Down Debt Strategically

If you have multiple debts, consider using either the snowball method (paying off the smallest debt first for motivation) or the avalanche method (paying off the highest-interest debt first to save money in the long run). Whichever method you choose, the key is to make consistent payments to reduce your financial burden over time.

3. Build a Savings Fund

Unexpected expenses are a major source of financial stress. Start building a savings fund, even if it’s just $25 a week. Over time, this fund will grow into a safety net that prevents financial setbacks from derailing your progress.

4. Repair Your Relationship With Money

Financial problems aren’t just about numbers—they’re often tied to emotions and habits. If you struggle with overspending, take some time to journal about how you ended up with that money mindset. Developing a healthy attitude toward money is essential for long-term success.

5. Look for Ways to Increase Your Income

If your financial struggles stem from not earning enough, consider ways to boost your income. This could include:

• Asking for a raise at your current job

• Finding freelance or side gig opportunities

• Upskilling or pursuing additional education to qualify for higher-paying jobs

• Starting a small business or monetizing a hobby

6. Set Clear Financial Goals

Financial freedom looks different for everyone. Define what it means to you and set specific, measurable goals. Examples might include:

• Paying off all credit card debt in two years

• Saving $10,000 for a down payment on a house

• Building a $5,000 savings fund within a year

• Investing a certain percentage of your income for retirement

The Power of Acknowledgment and Action

Taking control of your finances starts with acknowledging the problem. It’s okay to feel overwhelmed at first, but remember that financial freedom is possible—no matter how deep in debt you are or how much you’ve struggled with money in the past.

By recognizing your financial challenges and taking small, consistent steps toward improvement, you’ll build the foundation for long-term financial security. The key is to start today. 

We know you can do it because we're each on our own financial journey. Follow along on Facebook and Instagram as we share more about learning to befriend your money.