This article is reblogged with the permission of Returning Citizens Credit Union, a new credit union for formerly incarcerated individuals and their families. Learn more at https://www.returningcitizenscu.org/.

If you’ve just left prison, one of your first priorities should be getting your finances in order. There are several parts to this process that can help you avoid making costly mistakes, and instead, begin managing your money more wisely. Read on to learn five financial tips that can have a huge impact on your future. Some are easy enough to get started on today!

Check Your Credit Report

Even though you’ve been away, your credit history hasn’t frozen in time. There have probably been many changes to your credit report, so it’s important to check it for accuracy. You are entitled to a free credit report once a year from each of the three major credit bureaus: to access your free report visit AnnualCreditReport.com. So, if you come across a service trying to charge you a fee, don’t do it.

Now is also a great time to start understanding what your credit score is and what it means. At its most basic level, a credit score is a three digit number (ranging between 300–850) that represents how likely you are to repay debt, based on your repayment history and amount of debt. The higher your score the better! There are many ways to improve your credit score, such as paying your bills on time and paying off debt. Ultimately, improving your credit score will enable you to qualify for home loans, auto loans, and impact many other parts of your financial life, so it’s important to know where you stand.

Make a Budget

It’s very difficult to manage your money if you don’t understand where it’s going. Now that you have a fresh start, it’s a great time to begin a new budgeting system. Your budget is your plan. Budgeting is just a complicated term for keeping track of how much money comes in, how much goes out and how much is left over. Ideally, you want to spend less than what you earn. If you have any money left over, you should put it aside for a rainy day.

A budget will help you spend smarter and identify opportunities to keep more money in your pocket. Your budget will put you in touch with the reality of your financial situation. You will be able to pinpoint exactly where you need to tighten your spending and where you may be able to spend for enjoyment. A disciplined budget will allow you to track every cent you spend.

Your budget will be customized to you: how you spend money, what your priorities are, and what you’re saving for. A simple way to set up a new budget is to follow the 50/30/20 rule. Put 50% of your income toward necessities, like housing and bills. These are your needs. Put 30% towards your wants like dining out and entertainment. Finally 20%, or whatever is remaining, should then go toward your emergency fund. Online budget calculators can help you do this and are super easy to use.

Avoid PayDay Loans and Check Cashing Services

If you’re in a financial bind and need money immediately, payday loans may seem like a great way to go. After all, they are quick and easy to sign up for, and many services ignore credit reports altogether. However, payday loans are incredibly difficult to walk away from and are one of the worst options for you if you are trying to repair your finances.

A payday loan is one way that many Americans who don’t have emergency funds are able to quickly come up with money to pay for unexpected bills and emergencies. What many people don’t realize is that the rates for payday loans can reach up to 400%, meaning that the interest they charge you will continue to compound, and you may need to take out a second loan to pay off the first. In all likelihood, you won’t have the money to pay off either loan, so you’ll need to take out a third. Soon, you will have entered a vicious cycle that is nearly impossible to escape and will ultimately put you in a far worse situation than when you started.

What’s the best way to avoid taking out a payday loan? Well, you can’t plan for everything, but if you stick to your budget and are able to put aside some money for an emergency fund, then you will be better prepared for unexpected situations.

Open a Second Chance Bank Account

If you’ve been away and you have accrued late fees, overdraft fees, or other issues that have negatively impacted your bank account, it may be in your best interest to simply start fresh. Once you have corrected the issues with your previous bank, you might want to think about opening a Second Chance Bank Account with a financial institution that offers this type of account and understands your situation.

Second Chance accounts are very basic checking accounts designed for people who need to rebuild their credit and banking records. Though these accounts are somewhat restricted and have lower withdrawal and debit limits, they have lower monthly fees and no overdraft.

When you begin to earn a paycheck, consider setting up direct deposit with your new bank account. Most employers offer this option, and you don’t have to mess with cashing checks — there are no fees and the money will be ready in your account instantly on payday.

Start Taking Steps to Get Your Debt Under Control

So what’s the most important thing you can do to start controlling your finances and handle your debt? Begin by collecting all of the information you have for every credit card, loan, and any other debt that you owe. Write down the total amount you owe, the minimum monthly payment, and the interest rate for each bill.

Next, start prioritizing your payment plans. The easiest way to start paying off your debt is to pick the smallest bill and throw any extra money at it you can (while still paying the minimum monthly payments on your other bills). After several extra payments, you will be able to pay off that smallest bill and then move onto the next largest bill. This is called the debt snowball, and is the best way to begin paying off debt.

In addition to paying off debt, make sure you start funding an emergency fund. Aim for $1,000 to start, so that if you have an emergency like a car repair, sudden medical bill, or other expense, you can pay it without breaking the bank.

If you have time, make sure to read more about how to begin addressing your debt.

Start slow, and don’t get discouraged

Taking control of your financial life doesn’t have to be intimidating. With just a few minutes each day spent paying attention to your budget and staying on track, you will begin to notice some significant improvements in your financial habits. Once you have a system in place and know where all of your money is going, it will become easier and easier to improve your financial health.

From here, you’ll be on your way to financial freedom!