It is hard enough to declare bankruptcy, but it can be an even longer journey to rebuilding financial sustainability. The question of surviving bankruptcy is a very big one for anyone who has ever had to declare bankruptcy. The bigger question once you’ve survived is how to fix your finances after bankruptcy. It is important to be able to answer both questions in order to get on to a stable financial life back in order. Knowing how to file for bankruptcy is difficult, but legal help can simplify the process. Once that’s finished, you need to fix your finances so that it doesn’t happen again. 

This article will answer the question of how to rebuild finances after bankruptcy. Citing practical examples, we will guide anyone through not only how to survive bankruptcy, but also how to rebuild finances right after you’ve filed for bankruptcy. Get your life back on track with these post-bankruptcy budgeting tips. 

Track Your Expenses

Once your debts have been forgiven, you need to make sure you don’t fall back into debt. Start by taking the time to track your expenses. For a month or thereabout, you should write out every dime you spend on everything and anything. If you intend to fix your financial situation, you should not cheat on this exercise. Once you find out how you spend money when you don’t have a budget, you will have a clue about how you should spend money. Tracking your normal expenses can help to shed light on your problem areas and spending habits. 

Avoid the Temptation of the Plastic Card

Let’s be upfront with the truth: swiping a plastic credit card makes it far too easy to spend money and to even overspend it. When you are tracking expenses, you should endeavor to stay off credit and debit cards. While they may be convenient, they also make it easy to overspend without realizing the damage you’ve done to your bank account. 

Avoid the temptation of paying with your card. If it is possible, stay completely off it. If you can, you should go back to the old-fashioned envelope system of budgeting. Yes, it is old school to have an envelope set aside and labeled for each expense, but it works for many people. Using cash can set your budget in reality, as you can see physically how much you have to spend. 

Cut Back on Non-Essential Spending

Once you have tracked your expenses and you know where your money is going, you can begin to check out the things you enjoy but cost you too much. While you don’t have to get rid of every small luxury, you’ll need to cut back to rebuild your finances and avoid falling back into debt.  

The key is for you to be able to have as much fun while spending less. For example, if you eat at a restaurant for lunch every day, you might want to trim it down to just one or two days per week. You can have a packed lunch for the remaining days – making your own food is much more cost-effective than eating out. You can free up the rest of the money for some other important expenses.  

Save Up

If there is a golden key to surviving bankruptcy, it is saving up as much as you can. You must be able to save money and your budget will only help you achieve that. You should be able to save up to 10% of your income while you are rebuilding your finances after bankruptcy. That means that you should be spending about 2/3 of your salary on your fixed expenses while the others go into recurrent expenses.

In a world driven by technology, you can find an ally to help you save – in the form of an app. There are various budgeting apps that will remind you when you’re close to your spending threshold, or that can automatically put part of your income into savings. 

The more available and visible your money is, the more the urge to spend the money. The trick is to, therefore, move the money out of sight and out of the area where you can touch it. Use a savings account, invest, or find an app that will help you keep your money secure so that you can’t spend it on a whim. 

Take Advantage of a Clean Slate

More often than not, it was faulty budgeting that got you in your bankruptcy issue in the first place. Now that you are solvent again, it is good to think of this state as a tabula rasa, a clean slate. That will allow you to re-plan your strategy and be better at budgeting this time around. 

Look at how your former budget failed and you will be able to build a formidable budget that can help you in the journey of surviving bankruptcy. Look at your financial situation as a positive, clean slate, rather than feeling sorry over your previous financial failings. You must be aware that your attitude is important if you are intent on surviving bankruptcy.

Create an Expense Flowchart

Once you have survived the first month after filing bankruptcy and you have seen where your money has gone for the first month, you can then create an expense flowchart. It might sound complicated and time-consuming, but it is not actually. With a basic knowledge of excel, you can find out the categories you spend on and see where you spend a lot and where you’re doing well. Your adjusted tracking can help you learn the exact figures. With this information, you can make a more informed decision about how to budget going forward. 

Craft Your Budget

With all the information at your fingertips, you can now create a budget that will be a reflection of the current realities in your spending. Your budget is the ultimate answer to how to fix your finances after bankruptcy. Do not join the category of people who discard their budgeting needs after declaring bankruptcy. Starting fresh is no excuse to make the same mistakes!

It is normal to feel bitter after filing for bankruptcy, however, you must keep your mind on the fact that surviving bankruptcy is the goal. You might be tempted to do away with budgeting, but now you need to budget better than ever before. If there is any practice that can answer the question of how to rebuild finances after bankruptcy, it is budgeting. Get your budget straight and stick to it to get your finances back in a firm grip.