Build a budget
Creating and sticking to a budget will help your long-term financial health. And this is your first step of debt consolidation. Start listing your income and expenses and then compare the totals. If your total expenses are higher than your total income – you’re spending above your means. If you can’t increase your income quickly to cover your expenses and save for a rainy day, you will need to reduce your spending. Your budgeting goal is to always have income higher than expenses.
Reduce your debt
Use credit wisely and sparingly. To reduce your debt, build a debt repayment or reduction strategy. Some people suggest that you should aim to repay the debt with the highest interest rates first. Others suggest that you should list all your debts starting from the smallest to largest, and start repaying them, beginning with the smallest and working your way up. That way, you will have some small "wins" early on, which should motivate you to keep going. You should also consider managing the interest rate on your outstanding balances by transferring balances from high interest credit cards to lower interest rate lines of credit. No matter which strategy you use (or consider trying all three), committing to a consistent debt reduction program will improve your financial health.
Add a credit monitoring service
Credit monitoring services help you secure the credit you’ve worked so hard to build. Think of it like a night watchman, looking out for the presence of unauthorized activity in your credit corridor. It monitors your credit file and alerts you to key changes such as a new account opened in your name or negative information like a late payment reported by one of your creditors. Credit monitoring keeps you informed, helps you stay on track and is a great way to maintain a healthy credit score.
Create an emergency fund
Having an emergency fund provides security and peace of mind knowing that you'll have money in your account in the event of job loss, health issues or other unexpected events. Your goal should be to have enough money in your emergency fund to cover six to eight months of expenses. Start by trying to save 10% from each paycheque.
Prepare for the future
If you want to protect your children and other beneficiaries from future financial hardship, you need a plan. You can start by taking out life insurance, opening a retirement account and, if applicable, creating an education savings plan.
Put aside a portion of your income for guilt-free spending. If you sacrifice too much on your mission for good financial health, you risk relapsing and spending the money you've worked so hard to save. Make it a point to treat yourself occasionally. Try opening a "fun fund," an account you use for special weekend trips, nights out with friends or a big-ticket purchase.