A Gallup poll found that only 44% of Americans felt their financial situation was good or excellent in April 2025. That was the lowest percentage since April 2012.
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According to personal finance expert Ramit Sethi, many people feel stuck when it comes to actually fixing their financial issues. This leaves them not making progress and feeling stressed and anxious.
In a YouTube video, Sethi outlined a clear eight-step process that can help you improve your finances by 80%. Here’s what you can start doing today.
“You need to prove to yourself that you can make a positive change, starting with setting a small achievable goal,” Sethi explained.
He recommended a $1,000 emergency fund as a good first step since it helps prevent future debt for unexpected expenses and will motivate you to keep working on your finances. To make good progress toward this goal, aim to put aside $100 to $200 per month. The Consumer Financial Protection Bureau suggested doing this via automatic transfers for consistency.
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Many people don’t know what’s happening with their money. Unfortunately, this makes change difficult since you might not know where the problem lies.
Sethi recommended taking these four steps to get a picture of your finances:
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List all your financial accounts.
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List your debt balances and their interest rates.
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Determine your monthly gross and net income.
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Identify your fixed monthly expenses, such as rent, insurance and food.
After doing this, focus on your total debt amount, which Sethi said may surprise you.
“If you pay the minimum on your high-interest debt, you are lighting money on fire every single month,” Sethi said.
For example, Discover’s credit card interest calculator showed that making a $250 minimum payment on a $10,000 credit card balance with a 25% APR would cost you over $12,000 in interest and take 89 months to pay off. That adds up to over $22,000 paid in total.
Sethi recommended the debt avalanche method for paying down your costliest debt first. Refer to your list of debts and find the one with the highest rate. Put as much cash as possible toward paying that balance off and pay the minimum for the others. Once the balance reaches zero, repeat the process with the next high-interest debt.
Sethi recommended looking for ways to cut expenses by going through each line of your last three months of statements. Make note of any forgotten expenses (like monthly subscriptions), impulse buys and small but frequent purchases.
